The competition between LCD and plasma displays in the large, flat-panel screen market has been a fierce one over the past few years. In August of 2006, Sony announced its plans to exit the plasma TV market to focus solely on LCD technology. Since then, Sony has been battling it out with Panasonic -- a company that favors plasma displays.

LCD TVs traditionally have had the market covered from 20" to 37". Plasma TVs, on the other hand, have enjoyed favor in screen sizes of 40" and above. Fast-improving display quality, higher screen resolutions and cut-throat pricing, however, are allowing LCD TVs to cut in on plasma's 40+ inch stronghold.

The overall plasma TV market also took a major hit in February -- sales dropped from $216 million USD from the year before to $181 million USD due to steady price erosion. "Unlike LCD TVs, plasma TVs have not been able to offset lower average prices by reaching high volumes in their larger screen sizes," said NDP Group analyst Ross Rubin in April. "While these lower prices have allowed plasma manufacturers to reach out to a broader consumer base with a differentiated display technology, it's still not enough to keep revenue on the rise."

LG Electronics is starting to feel the pressure and has announced plans to shutter its oldest and smallest plasma-panel factory. LG expects to save between $22 to $32 million USD with the measure and will see its plasma-panel production drop from 430,000 units per month to 360,000 units per month.

"The best option for LG may be selling off its entire [plasma-panel] business rather than shutting down some of its plants," said Goodmorning Shinhan Securities analyst David Min.

The poor performance of LG's plasma panel display business has cut into the company's bottom line. A year ago, LG Electronics witnessed a 150.8 billion won ($161.7 million USD) Q1 net profit. For Q1 2007, the company lost 123 billion won ($132.1 million USD).