TOKYO, JAPAN: Liquid crystal display (LCD) makers had predicted shoppers would snap up the biggest flat TVs as prices came down, but are finding that it's the smaller models that are moving faster off the shelves.

TV screens sized 32 inches or smaller and TV-viewing PC monitors are a cheaper way to replace bulky cathode-ray sets for many consumers in emerging markets, such as China, India and Russia, in time for the Beijing Olympic games.

A US economic slowdown has curbed demand for larger, more expensive sets.

Makers had previously forecast premium 40-inch sets would be the main money-spinners and spent heavily in a race to build larger factories suited for bigger panels.

Now, makers with strength in small screens, such as Taiwan's AU Optronics Corp, and those with a focus in the Chinese market such as LG Display Co Ltd are in favour.

"As of now, 32-inch is almost one third of the market," Champ Shin, vice president in charge of TV screen sales at LG Display, said.

"Up to now most LCD makers had focused on large screens only. But the growth rate of larger screens seems to be a bit slow. And there's big demand for TVs using monitor panels or smaller TV panels." 

LG Display is switching some of its TV panel capacity to computer screen production, building a new line for smaller panels and strengthening ties with Chinese TV makers.

The lead by small-size TVs will likely continue for the next few quarters as the US economy stutters and the Chinese TV market takes off ahead of the Olympics.

32-inch TVs are the most popular model for those replacing conventional cathode-ray tubes, whose market size was around 100 million units in 2007, according to Lehman Brothers.

High-definition monitors adopting the wider TV screen format are increasingly sold for TV viewing, as new technology such as broadband TV has blurred the line between monitors and TVs.

So-called moniTV sales could more than double in 2009 to top 50 million units, AU CEO H.B. Chen said at the Reuters Summit.

"All these monitors can still provide very good TV performance. MoniTVs are a new segment to grow," Chen said.

The entry-level 15-inch models are for students or emerging market consumers, while 19-inch is becoming a mainstream in the moniTV market, said Paul Peng, AU executive vice president.

But the popularity of the small-size TVs won't last long as TV makers are aggressively cutting prices, which soon will spur up demand for larger sets.

In North America, Samsung Electronics Co Ltd, Sony Corp, and Vizio are conducting a fierce price battle for market share in the slowing market.

After all, moniTVs are not the flagship product.

"Do you want to have that in your living room? I don't think so. Large-size TVs will still be king in the future," said Nigel Lee, a fund manager at Taiwan's National Investment Trust.

A looming panel oversupply in 2009 will only help make bigger TVs affordable sooner than expected.

After an industry-wide spending curb last year, new capacity from top makers such as Samsung and LG Display is set to hit the market early next year.

Analysts expect prices of 40-inch grade TVs to fall below $1,000 by the 2008 fourth quarter, boosting demand. Sony has lowered prices of its key LCD TV models by 30 percent in the second quarter, they say.

"40- and 42-inch TVs, along with the 32-inch model, will become the mainstream in the global market by 2010," said Jeff Kim, analyst at Hyundai Securities.

The phase-out of analog broadcasting in the United States in early 2009 is also expected to speed up TV replacement demand.

"In the U.S., the sweet spot is quickly moving to 40 inches," Mike Splinter, CEO of Applied Materials Inc, told the Reuters Summit in New York.

"(TV size) is going to continue to move up for the next few generations. I don't know where the limit is."

Research firm iSuppli forecasts worldwide LCD TV sales volume to top 100 million this year and reach 194 million in 2012. LCD TV shipments were at 78.5 million units in 2007.