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Analyst expects LCD demand to fall short

Posted: 21 Mar 2006     Print Version  Bookmark and Share

Keywords:Spencer Chin  Wedbush Morgan Securities  LCD TV 

Spot softness in demand and slower-than-expected price drops could signal a weakening of the LCD TV market in coming months, according to a report by New York-based investment firm Wedbush Morgan Securities.

Although the firm still expects shipments of LCD TVs to reach four crore (40 million) in 2006, it noted that LCD TV panel prices have not declined since May 2005, and may not drop enough to stimulate sufficient market demand to fulfil growth forecasts. Wedbush added that prices of high-end 37-inch TVs have only fallen by five per cent since May, less than expected given the segment is ramping into mainstream production volume.

The firm also noted that while demand for both LCD TVs and monitors in the United States is on target, it is weaker than expected in Europe, possibly leading to an inventory build-up and softening orders for display chip makers such as Genesis Micro and Trident Micro.

For LCD TV shipments to reach projected levels in 2006, Wedbush said that LCD panel prices would need to decline by 12 to 20 per cent over the next four months.

Although some industry observers have cautioned about the rapid expansion of LCD panel capacity, the firm said the increased emphasis on larger TV screen sizes is likely to absorb capacity expansions. That is likely to minimise the likelihood of lingering surplus capacity, the firm said.

Wedbush's warnings present a marked contrast to optimistic forecasts from other display industry analysts, who project LCD TV panel and unit prices to continue dropping as suppliers focus on cost reduction. Kenny Kim of market research firm Displaybank, said that steep price reductions could adversely affect some Taiwanese suppliers as they struggle to maintain margins and amortize costly fab investments.

- Spencer Chin
EE Times

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