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Coretronic may Open the Door to 3LCD

Projection business booms By Steve Sechrist

Steve SechristIt was almost an aside. As part of a positive earnings statement yesterday, Coretronic's Sheng-hui Wang, president of the projector business unit, said the company is considering expanding its product offerings to include 3LCD display technology. Not that the company hasn't done well by DLP - Coretronic is now the leading OEM front-projector maker, and uses Texas Instruments DLP technology exclusively. Steve Sechrist, Insight Media Senior Analyst and Editor of Projection Monthly & Microdisplay Report, has this assessment of the situation.

The company recently reported a 66% year-over-year sales growth for the year ending in 2005, but the big gains came in the fourth quarter as sales jumped 33% to $457M on shipments of 231K units. This made Coretronic the top OEM supplier of front projectors for the year with 651K units sold and 19% global market share. All projectors in 2005 used DLP technology.

In August of this year Coretronic revised sales figures downward from 800K on a sluggish 1Q and 2Q'05. The company reportedly beat the revised 650K number by one thousand units as sales began to pick up steam starting in September when sales jumped 48% to 65K units over the July low of 44K units.

The 2005 growth that started in Q3 was stimulated in part by an ASP drop of up to 30% as entry-level models featuring 2000-lumen brightness and XGA resolution (1024 x 768), fell to the magic $1,000 level.

But not everyone was buying entry-level projectors. Coretronic said its 11% rebound in gross margins was due to strong shipments of higher-margin projectors, and the outlook gets better. The company expects to ship 900K units in 2006, gunning for 20% global market share. However, growth again will be spurred on in part by an expected 20% drop in prices as 2006 supply will outpace demand resulting in downward price pressure in the market, according to Coretronic.

Normally in an oversupply situation, companies don't invest in another technology. So what is going on? We haven't had a chance to talk to Coretronic directly, but here are some ideas.  

With price-reduction pressure being significant, and high growth occuring in the lowest-priced projection products, Coretronic needs to have a strong path to lower costs in this segment to remain competitive. With 3LCD engines costing less than DLP, perhaps the company sees more opportunities to compete in the low-cost segment with 3LCD technology. And with 3LCD under pressure in the MDTV market, providers may be more anxious to cut prices to not loose any more market share.

Alternatively, as a major OEM supplier, Coretronic may have had a request or two from large customers to make an 3LCD projector - an offer it couldn't refuse. Or, Coretronic could be partly using the move to extract better pricing from TI.

But don't look for the company to begin offering MDTVs anytime soon. We were told by Coretronic's home-grown brand Optoma that the company had made a strategic decision to abandon traditional RPTVs for very large (100-inch) in-wall models they call "Big Vizion," which were shown last year at CEDIA and, more recently, at CES.

As for TI, the prospect of losing technology exclusivity to the top front-projector OEM supplier that sells to the likes of Dell and HP won't be the end of the world. Still, they cannot be pleased with the news as rival technology 3LCD is a big fish, albeit mainly in the small sea of front projection.

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Steve Sechrist is an Insight Media Senior Analyst and Editor of Projection Monthly & Microdisplay Report. He can be contacted at
Related Keywords:Coretronic, Sheng-hui Wang, projector business, 3LCD display technology, DLP, OEM, Texas Instruments, DLP technology, Steve Sechrist, Insight Media Senior Analyst, Editor, Projection Monthly & Microdisplay Report

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