How did TVs get so cheap

 The market context for television sets has undergone a radical transformation over the last 25 years, characterized by a transition from luxury status to a commoditized, high-volume market where prices have fallen more than almost any other major consumer category,. This shift is primarily driven by the transition to Liquid Crystal Display (LCD) technology, which moved from 5% of the market in 2004 to over 95% by 2018.

The broader market context and the forces driving these cost reductions include several key factors:

1. Economies of Scale and Massive Capital Investment

The TV market justifies enormous investments due to its sheer size. Modern LCD fabrication plants ("fabs") can cost several billion dollars to construct but are capable of producing over a million displays every day. These "huge, efficient fabs" allow manufacturers to recoup investments in new process technology only because the global demand for screens is so massive. Furthermore, the industry has benefited from geometric scaling effects: as the "mother glass" (the large sheets from which individual screens are cut) has grown in size—from 12x16 inches to 116x133 inches—the equipment cost per unit of area has plummeted,.

2. Relentless Competition and "Strategic" Nationalism

The market environment is described as exceptionally harsh for manufacturers. Industry experts have characterized the LCD market as a "25 year suicide pact," where companies are forced into a cycle of relentless competition. This environment requires:

• Continuous reinvestment: Manufacturers must constantly build larger fabs and adopt newer technology just to stay competitive, even as profit margins are frequently threatened or turn negative.
• National Interests: This hyper-competitive state is partially fueled by nationalism, as various countries view flat panel display manufacturing as a strategic priority. This led to government efforts to prop up domestic industries, particularly in the U.S. during the 1990s and 2000s, further driving down global prices through subsidized competition.

3. Cross-Industry Synergy

The TV market does not exist in a vacuum; it has matured by leveraging the semiconductor industry. LCD manufacturing is described as being "a lot like the semiconductor manufacturing process, it’s just simpler and bigger". By using equipment originally developed for silicon chips (such as photolithography steppers) and adopting semiconductor expertise in contamination control and cleanroom yields, the TV market was able to fast-track its cost-reduction curve,.

4. A Shift in the Revenue Model

A significant, albeit more modern, contextual factor in cost reduction is the change in how TV manufacturers generate profit. In the current market, many TVs are sold at extremely low prices because they serve as "large ad display and consumer behavior tracking machines". The revenue generated from selling consumer data is believed by some to be higher than the profit from the actual hardware sale, which subsidizes the low purchase price for the consumer.

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To understand the TV market's trajectory, one might view it as an industrial "arms race." Just as nations in an arms race feel compelled to build more powerful weapons regardless of the cost to their own treasuries, TV manufacturers are locked in a cycle of building ever-larger factories to gain a fractional edge in efficiency, ensuring that while the manufacturers struggle to stay afloat, the consumer is left with a surplus of affordable technology.

The transition to Liquid Crystal Display (LCD) technology is the primary driver behind the dramatic collapse in television prices over the last 25 years. In 2004, LCDs represented only 5% of the market, but by 2018, they accounted for over 95%, transforming the TV from a luxury item into a mass-produced commodity.

The sources highlight several ways LCD technology and its evolving manufacturing processes have facilitated these cost reductions:

1. Geometric Scaling of Mother Glass

The most significant factor in LCD cost decline is the scaling of "mother glass," the large sheets from which individual panels are cut.

• Massive Size Increase: Mother glass has grown from "Generation 1" (12x16 inches) to "Generation 10.5" (116x133 inches), a nearly 100-fold increase in size.
• Efficiency Gains: Because many manufacturing steps are performed on the mother glass before it is cut, larger sheets allow for larger batch sizes.
• Equipment Costs: Due to geometric scaling, the cost of manufacturing equipment rises more slowly than the area of the glass. For example, moving from Gen 4 to Gen 8 mother glass reduced equipment costs per unit of area by 80%.

2. Adoption of Semiconductor Manufacturing Techniques

LCD production has successfully "fast-tracked" its efficiency by borrowing heavily from the semiconductor industry.

• Process Similarity: The sources describe LCD manufacturing as being similar to making computer chips, just "simpler and bigger," utilizing photolithography to etch thin-film transistors (TFTs) directly onto the glass.
• Reduced Complexity: Manufacturers have successfully reduced the number of process steps required to create these transistors, cutting them from eight separate masking steps down to four.
• Yield Improvements: By adopting semiconductor-style cleanrooms and robotics, manufacturers increased their "yield" (the percentage of functional units) from roughly 50% in early operations to over 90% today.

3. Key Technological Innovations

Specific engineering breakthroughs have drastically reduced production time and material waste:

• One Drop Fill: Originally, filling panels with liquid crystal via capillary action could take hours or even days. The "one drop fill" method, combined with UV light curing, reduced this time to minutes.
• Cutting Efficiency: Innovations like Multi-Model Glass allow manufacturers to cut different display sizes from the same mother glass sheet, maximizing the use of the material and reducing waste.
• Improved Machinery: The development of "Cluster" PECVD machines in the 1990s made the deposition of transistor materials faster while requiring less maintenance.

4. Economic and Market Drivers

The technical evolution of LCDs has been supported by a hyper-competitive market environment. Large, modern LCD "fabs" (fabrication plants) cost billions of dollars to build but can produce over a million displays daily. This massive scale is only sustainable because the global market for screens is so large, allowing manufacturers to recoup their investments. Furthermore, some manufacturers now view the TV hardware as a loss leader, subsidizing low LCD costs with revenue generated from selling consumer data and advertising tracked through the device.

The sources identify several critical manufacturing drivers that have transformed TV production from a specialized, low-yield process into a hyper-efficient, high-volume industry. These drivers collectively explain how TVs have fallen in price by more than 90% per area-pixel over the last 25 years.

1. Geometric Scaling of Mother Glass

The most significant driver of cost reduction is the dramatic increase in the size of "mother glass," the substrate from which individual TV panels are cut.

• Massive Scaling: Mother glass has grown from "Generation 1" (12x16 inches) to "Generation 10.5" (116x133 inches), an increase of nearly 100 times in area.
• Cost Efficiency: Due to geometric scaling, the cost of manufacturing equipment rises much more slowly than the surface area of the glass it processes. For example, transitioning from Gen 4 to Gen 8 mother glass reduced equipment costs per unit of panel area by 80%.
• Increased Batch Sizes: Larger sheets allow for larger batch sizes, which, contrary to some "lean manufacturing" trends, has resulted in substantial cost savings in this specific industry.

2. Process Optimization and Step Reduction

Manufacturers have streamlined the actual steps required to build a display, drawing heavily on semiconductor expertise.

• Masking Step Reduction: Building the thin-film transistors (TFTs) on the glass once required eight separate masking steps; engineers eventually reduced this to only four steps, significantly lowering production time and complexity.
• One Drop Fill Method: Historically, filling panels with liquid crystal via capillary action could take hours or even days. The development of the "one drop fill" method, which uses UV light to cure sealant, reduced this timeframe to just minutes.
• Cutting Efficiency: Innovations like Multi-Model Glass allow manufacturers to cut different display sizes from a single sheet of mother glass, maximizing the usable area and minimizing waste.

3. Automation and Yield Improvements

The transition from manual labor to highly controlled, automated environments has been essential for cost control.

• Robotics and Cleanrooms: By replacing manual labor with robots and moving operations into pristine cleanrooms to eliminate defects, manufacturers improved their "yields" (the ratio of functional units produced) from roughly 50% in the early years to over 90% today.
• Continuous Processing: While the industry uses large batch sizes for the glass itself, it has moved toward a "one piece flow" model for the mother glass sheets, where individual sheets move through the fab in a continuous process rather than being bundled in cassettes.

4. Massive Capital Investment and Scale

The sheer scale of modern manufacturing allows for efficiencies that smaller operations cannot match.

• Billion-Dollar Fabs: A modern LCD fabrication plant (fab) can cost several billion dollars to construct but is capable of producing over a million displays per day.
• Strategic Motivation: This scale is supported by "strategic nationalism," where countries view flat-panel manufacturing as a priority and prop up domestic industries, fueling a cycle of relentless competition and continuous reinvestment in newer, larger fabs.

5. Synergy with the Semiconductor Industry

LCD manufacturing is essentially "simpler and bigger" semiconductor manufacturing. The industry was able to fast-track its efficiency by adopting equipment—such as photolithography steppers—and contamination-control expertise originally developed for the silicon chip industry.

In the larger context of TV cost reductions, operational efficiency has been achieved through a combination of geometric scaling, process streamlining, and a shift toward continuous manufacturing. These improvements have allowed the price per area-pixel of TVs to fall by more than 90% over the last 25 years.

The following operational drivers are highlighted in the sources as central to this efficiency:

1. Scaling Batch Sizes via "Mother Glass"

While many modern industries emphasize "lean manufacturing" and small batch sizes, the LCD industry has found extreme efficiency by increasing batch sizes through the use of larger "mother glass".

• Geometric Scaling: As the size of the mother glass increases, the equipment costs to process it rise more slowly than the surface area of the glass itself. For example, moving from Generation 4 to Generation 8 mother glass reduced equipment costs per unit of area by 80%.
• Cutting Efficiency: Operations have become more efficient through Multi-Model Glass strategies, which allow manufacturers to cut multiple different display sizes from a single sheet of mother glass, significantly reducing wasted material.

2. Reduction of Process Steps and Time

Efficiency has been gained by literally doing less work to achieve the same result and doing it faster:

• Masking Step Reduction: The number of separate masking steps required to build thin-film transistors on the glass was halved, dropping from eight steps to four.
• The "One Drop Fill" Method: Historically, filling panels with liquid crystal via capillary action took hours or even days. The development of the "one drop fill" method, which uses UV light to cure sealant, reduced this operational timeframe to just minutes.
• Faster Machinery: The introduction of "Cluster" PECVD machines in the 1990s allowed for faster material deposition with significantly less maintenance downtime than previous equipment.

3. Improving Yield and Reducing Variability

Operational efficiency is heavily dependent on "yield"—the percentage of functional units produced.

• Automation and Cleanrooms: By moving production into cleanroom conditions and replacing manual labor with robotics, manufacturers reduced defects.
• Yield Gains: These changes saw industry yields climb from roughly 50% in early operations to over 90% today.
• Durable Substrates: As glass substrates became more durable, factories could employ more aggressive and faster etching processes without increasing the rate of breakage or defects.

4. Transition to Continuous Process Manufacturing

The industry has shifted its internal logistics to mirror a "one piece flow" model at the level of the mother glass. Early fabrication plants (fabs) moved sheets of glass in bundled "cassettes," but modern, more efficient fabs move individual sheets of mother glass through the manufacturing steps in a continuous, uninterrupted process.

5. Revenue Efficiency Beyond the Hardware

An emerging facet of operational efficiency is the shift in the TV’s purpose. Some sources suggest that TVs are now sold so cheaply because they function as consumer behavior tracking machines. The revenue generated from selling user data is believed by some to be higher than the profit from the hardware sale itself, allowing manufacturers to subsidize the cost of the physical unit.

Economic and strategic factors have played a defining role in the collapse of television prices, transforming the industry into a high-stakes, hyper-competitive environment where hardware is often sold at razor-thin margins. The sources highlight several key economic drivers:

1. Economies of Scale and Capital Intensity

The sheer size of the global market for screens justifies the massive capital investments required for modern production.

• Billion-Dollar Investments: A state-of-the-art LCD fabrication plant (fab) can cost several billion dollars to construct.
• Massive Output: These "huge, efficient fabs" are only viable because they can produce over a million displays every day, allowing manufacturers to recoup the costs of developing new process technologies.
• Geometric Scaling: From an economic standpoint, the most effective driver has been the scaling of "mother glass". Because the cost of manufacturing equipment rises more slowly than the surface area of the glass it processes, moving from Generation 4 to Generation 8 mother glass reduced equipment costs per unit of panel area by 80%.

2. The "25-Year Suicide Pact"

The economic environment for manufacturers is described as relentlessly harsh, characterized by a cycle of continuous reinvestment and shrinking margins.

• Relentless Competition: Industry experts have likened the LCD market to a "25-year suicide pact" because companies are forced to build increasingly larger fabs and adopt newer technology just to survive.
• Threatened Margins: This competitive pressure means that profit margins are constantly under threat and occasionally turn negative, yet companies cannot stop investing without losing their market position.

3. Strategic Nationalism

The rapid decline in TV costs has been accelerated by government intervention and national interests.

• Strategic Priority: Many countries view flat-panel display manufacturing as a strategic priority, leading to efforts to prop up domestic industries.
• Subsidized Competition: For example, there were various efforts to support U.S. LCD manufacturing in the 1990s and 2000s for strategic reasons. This nationalist-driven investment further increased global supply and drove down prices for consumers.

4. Cross-Industry Economic Synergy

The TV industry did not have to develop its efficiency in isolation; it leveraged the economic and technical momentum of the semiconductor industry. By using equipment and contamination-control expertise originally developed for silicon chips, the display industry was able to "fast-track" its own cost-reduction curve.

5. Shift to Data-Driven Revenue Models

A significant modern economic factor is the shift in how manufacturers realize profit. Many TVs are now viewed as "large ad display and consumer behavior tracking machines".

• Subsidized Hardware: It is believed by some that the revenue generated from selling consumer data is higher than the profit from the actual sale of the TV hardware.
• Industry Secretiveness: This shift in the revenue model is cited as a major reason for the industry's high level of secretiveness regarding its financial and operational inner workings.