As the prices of the biggest flat-screen TVs are coming down, the smaller models are moving faster off the shelves.
The reason? The economic crunch has curbed demand for larger sets because they're still pretty pricey. The lead by small-size TVs will likely continue for the next few quarters as the economy continues to stutter.
LCD 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.
But 32-inch TVs are the most popular model for those replacing conventional cathode-ray tubes, according to Lehman Brothers.
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.
Samsung Electronics, Sony Corp., and Vizio are conducting a fierce price battle for market share in North America's slowing market.
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."