The American TV industry may be poised for a startling resurrection. “We’re going to raise people’s eyebrows this year,” vows Gerry Smith, Vice President of Dell in Singapore.

Television makers of Asia, meet Michael Dell.
Every day, across Asia, thousands of liquid-crystal and plasma displays roll out of factories owned by Samsung, Matsushita, Sharp, Pioneer, LG, and five Taiwanese companies. These are among the world’s top suppliers of the elegant thin televisions that are now streaming into homes everywhere. The Asians have committed $35 billion in flat-panel capacity in 2004 and 2005. And as the TV manufacturers place their bets, legions of suppliers of glass, semiconductors, and other components are revving up their own production lines.

The surge in investment and proliferation of suppliers have driven panel prices down to levels unthinkable even two or three years ago. That has opened the door to a set of competitors the Asians never expected to face: Dell Inc., Hewlett-Packard Co., and others in North America. They are making a concerted push in flat TVs, sourcing the panels from Asia and using the same global supply-chain wizardry they have employed so effectively in PCs, printers, and other products. Sylvania and Philco are long gone, and there is no sign that the mass production of giant flat panels will migrate to North America.

Dell’s low cost structure, peerless supply chain, and direct-sales model let it drastically undercut rivals’ prices. In the fall it introduced high-definition 42-inch plasma sets for less than $3,000, with incentives, while Sony and others were selling similar models for more than $4,000. In a matter of months, Dell seized 10% of this important slice of the plasma market in the U.S., according to researcher DisplaySearch in Austin, Tex. The Asians dropped their prices quickly in response. But Dell intends to keep up the pressure.

The return of American TV brands sets the stage for an epic battle between the forces of commoditization and manufacturing innovation. In the first camp, Dell and HP are already two of the world’s biggest buyers of flat-panel monitors, semiconductors, and other parts for PCs, so they have great leverage over the same Asian suppliers when it comes to sourcing thin-screen televisions. In the innovation camp, Japanese, Korean, and Taiwanese companies will spend almost any sum to dominate flat-panel TV production. With their prowess in manufacturing, they gain an edge in design, engineering, and product innovation that the Americans may have trouble matching.

The speed and magnitude of these mostly Asian investments is without precedent in the history of television. A Seoul-based joint venture owned by LG Electronics and Royal Philips Electronics is spending $5.1 billion to create the world’s largest plant for liquid-crystal displays. Sony Corp. and Samsung are teaming up in a $2 billion LCD venture. AU Optronics Corp., partly owned by Taiwan’s BenQ Corp., just started production at a new $2.5 billion complex big enough to house six Airbus A380 jumbo jets. Matsushita Electric Industrial Co., which has spent billions to ramp up in plasma screens, is sinking $1.3 billion more into a new plant just to provide the chips for thin TVs. “This is the chance of a lifetime,” says Fumio Ohtsubo, a senior managing director at Matsushita. “Companies that lose out now will find it very difficult to recover.”

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