"Flat" deal

Hewlett-Packard will purchase $5 billion worth of computer panels from LG.Philips

American corporation Hewlett-Packard Co. entered into a three-year, $5 billion contract to purchase flat panel panels for laptops and monitors. The seller was LG.Philips LCD, a joint venture of South Korean LG Electronics Inc. and the Dutch Philips Electronics NV, which is the second largest manufacturer of flat screens in the global market. For LG.Philips LCD the agreement is fundamental. Lee Bang-soo, a spokesman for the company in North Korea, said in an interview with Bloomberg that deliveries under the agreement accounted for 63% of the unit's sales last year. “This major long-term agreement will strengthen our presence in the notebook and LCD market. It will help LG.Philips LCD take a leading position in this field,” the company said in a statement.

For the South Korean enterprise, this deal looks like an attempt to rehabilitate its production. In April, LG.Philips LCD reported a decline in quarterly financial results for the first time in two years. Industry experts believe the poor results reflect a general trend in the market - falling prices for liquid crystal displays. The cost of the most common type of flat screens used in computers and televisions fell 10% in the first quarter. And according to the results of the second half of last year, the price drop was more than 40%. However, in a sense, this state of affairs turned out to be beneficial for LG.Philips LCD, since it allowed it to outperform its main competitor, Samsung Electronics Co., in some indicators in the last quarter. At the same time, experts still find it difficult to say whether the joint venture will be able to maintain its gained positions.

In recent months, LG.Philips LCD has been actively trying to introduce innovative technologies. At the end of May, at the Society for Information Display exhibition in Boston, its division presented a prototype of a 42-inch high-resolution LCD panel that displays 68.7 billion colors (conventional LCD panels can only display 16 million colors). According to The Korea Times, the new development used a fundamentally new 12-bit LCD System technology. According to professionals, the richness of the color palette reproduced by this technology is four thousand times greater than that of modern analogues. In addition, the development of LG.Philips LCD includes the so-called “blurring” effect when reproducing the movement of objects.

Experts believe that the signed contract between LG.Philips LCD and Hewlett-Packard Co. will give impetus to the production of liquid crystal monitors. According to Kevin Lee, an analyst at Seoul-based investment company Dongwon Investment Trust Management Co., the long-term contract indicates that the prospects for this production are “very good.”

Denis UVAROV