I was looking at prices of LCD HD televisions today. In one instance a 26" cost around $1000, a 32" cost around $2000 and a 42" of the same brand and model cost around $4000. It seems that the price increase for screen size is out of proportion to the increase in the screen size. Since the internal electronics would be the same, I assume, between the different sizes, why is the price difference so great? Is the screen itself the most expensive thing to manufacture?
IMHO, the price increase would be proportional to the area of the screen, not to the diagonal dimension, at a minimum.
Larger screens would not have a vastly-larger number of pixels (1920 x 1080 max for “1080p” or “1080i” is 1920 x 1080 max, no matter how big the screen actually is), but the larger size increases the difficulty of handling the screen and constructing the set, the chance of getting a defect on the screen during manufacture, and so on.
A liquid-crystal display is essentially a very large integrated circuit, and it requires a much lower defect rate across its area than regular ICs, since defects result in visible flaws or dead pixels.
Regular ICs may be made to far-smaller tolerances, but they’re also a lot smaller (1 cm or 2 cm on a side), and made in large batches on their substrate. Defects on the substrate may result in non-working circuitry at that point, but this doesn’t matter as much: the chips are all tested, and, when they are cut apart, the ones that don’t work are tossed. For an LCD, flaws mean the whole thing is tossed, not just the parts that don’t work.
Bought a 42" LG lcd tv at Circuit City a month ago or so for $1500.
Manufacturing cost sets at most a price floor. Retail prices are set by various marketing strategies. A key market strategy is price differentiation, in which one attempts to both:
(a) have a low margin product on the market at a price that less wealthy people can afford (so as not to lose them as a segment of the market altogether) while
(b) also having on the market a top end product that takes advantage of what wealthy people can afford to pay, if they have to, to get the best.
Defect rate increases exponentially with surface area which can make yield on large screens abysmal. Imagine you have a process that can produce a 10" diagonal screen correctly 95% of the time. To make a 20" screen, you need to essentially get 4 adjacent 10" screens without defects so your chances are 0.95^4 or 81%. 30" screen is 0.95^9 or 63% yield. 40" is 0.44, 50" is 27%. Assuming each 10" substrate costs $100, and assuming the rest of the process costs $100 here is your Cost of Goods list:
10" $ 205
20" $ 591
30" $1528
40" $3735
50" $9112
This is a pretty close approximation to actual costs. Now if you assume the process is mature and the substrate costs $30 per 10" square and the yield is now 0.995, here is your new curve:
10" $ 130
20" $ 222
30" $ 382
40" $ 620
50" $ 950
This is much closer to what you would expect to see once the process is stabilised and the price differential between sizes drops markedly.