Customers hoping the cost of LCD monitors will fall may have to wait another 18 months, as 15-inch monitor supplies grow constrained and manufacturers focus on larger, higher-margin screens.

Worldwide president of hardware manufacturer Acer, JT Wang, warns of an upcoming "great LCD shortage" this year, due to a number of factors that have seen demand outstrip supply – as manufacturers failed to predict a sustained upswing in demand – and have also switched to making more lucrative LCD TVs.

Wang said that LCD component manufacturers, particularly panel makers, had not met output expectations for the fourth quarter of 2003, with the lack of supply and growing demand set to compound shortages throughout 2004.

"Fifth-generation (mass production facilities) did not perform as well as expected. The output was not as good as expected; that is the number-one reason.

"The second reason is that all the LCD panel manufacturers rushed into TV panels, because the gross margin is higher than for monitors and notebooks. It's like a kind of fever; people just all went in the same direction," Wang said.

Wang however, is betting that the craze will not last out the year as non-standard TV transmission formats, coupled with a lack of high-definition digital spectrum, conspire to disappoint end users.

"LCD is fantastic for DVD, but TV is very different from DVD. I think people will be disappointed until high definition TV becomes widespread. They are thinking that LCD will take off, but we don't think so. The content and transmission still have quality issues. We will have to wait six months for TV fever to cool down," Wang said, adding that manufacturers in Korea and Taiwan had been slowly returning to producing monitors over the last three months.

IDC PC analyst Michael Sager confirmed the shortage, but said that increased demand for LCD displays of all kinds was driving the shortfall, particularly for 15-inch displays that held little profit margin compared to their wide-screen siblings.

"It's not so much an LCD shortage as a panel shortage. It takes a good year for a panel factory to come online. The market did not anticipate the level of demand and is now paying the price. Vendors with deep supply chains are now seeing shortages," Sager said.

Customers are making choices too, he said: "Some people are choosing to get new boxes but keep their CRT monitors. There have been some distortions. The price of alternative flat-screen CRT monitors has increased marginally."