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iSuppli: Large LCD panels expected to post strong Q3 results

Posted: 23 Oct 2007     Print Version  Bookmark and Share

Keywords:large LCD panels  Q3 results  TV market 

Suppliers of large-sized LCD panels are expected to post strong Q3 results with robust demand from all major application markets coupled with price increases every month in the three-month period, according to market research firm iSuppli Corp.

The firm forecasts that global large-sized LCD panel revenue in Q3 will increase by more than 17 per cent compared to the previous quarter and 45 per cent compared to the same period in 2006. The large-sized LCD market has been on the road to recovery since Q2.

"iSuppli estimates that revenue rose to Rs.67,548.64 crore ($16.7 billion) in Q2, up from Rs.54,200.71 crore ($13.4 billion) in the first," said Sweta Dash, director, LCD and projection research for iSuppli. "Despite an anticipated softening in demand growth in Q4, with the strong Q3 results we expect, large-sized LCD panel revenue for all of 2007 to rise by more than 27 per cent to Rs.277,879.75 crore ($68.7 billion), up from Rs.218,016.28 crore ($53.9 billion) in 2006."

As for shipments, the large-sized LCD market is expected to reach 37 crore units by the end of 2007. "iSuppli expects 20 per cent unit growth for monitor panels, 35 per cent growth for notebook panels and 51 per cent growth for the TV panel market in 2007 compared to 2006," Dash added.

LG.Philips LCD, the first major panel maker to announce Q3 results, started the earnings season off impressively, announcing an 18 per cent increase in revenue compared to Q2 and a 43 per cent rise compared to Q3 of 2006. Samsung followed with an equally impressive 20 per cent increase in LCD revenue compared to Q2, and a 34 per cent increase compared to Q3 of 2006.

Tight supply, prince increase
Supplies of large-sized panels fell short of demand in Q3 due to customers placing orders for the holiday season earlier than usual. Other factors behind the shortage included cuts in panel suppliers' fab utilisation rates in the first half of 2007, slowed production expansion plans and greater capital-spending discipline among LCD makers.

In addition, supplies of desktop-computer monitor, notebook and 32-inch and smaller TV panels remained constrained throughout Q3, spurring significant price increases. Most mainstream notebook and monitor panel prices increased by 7 to 10 per cent from June to September, after a 10 to 15 per cent price increase from April to June. The average 32-inch and below TV panel price rose by only 2 to 3 per cent from June to September after a 4- to 5-per cent price increase from April to June. The 40/42-inch TV panel price also decreased by less than 5 per cent from June to September.

iSuppli also observed that profitability among the large-sized LCD suppliers was better in Q3 than in Q2. Monitor panels were particularly profitable while TV panel profitability lagged behind the notebook and monitor panels. This resulted in a partial shift in production capacity from TV panels?especially the 32-inch size?to monitor panels.

iSuppli forecasts large-sized LCD panel revenue for 2007 will increase by more than 27 per cent to Rs.277,879.75 crore ($68.7 billion).

The trend contributed to the supply tightness in Q2, resulting in panel price increases and higher profitability compared to the previous quarter. The 32-inch and 40/42-inch WXGA TV panels still generated only a 5 to 15 per cent profit margin in Q3.

Larger sizes, larger profits
The LCD TV market is shifting to larger sizes due to the increased availability of bigger panels at lower prices. Furthermore, the move to the thin form-factor and wide-format LCD display technology means that consumers can more easily fit televisions with larger screen sizes into their homes. This trend, combined with HD resolutions, means such large-screen sets are practical for more consumers.

This shift to larger-sized panels is expected to boost revenue and profitability for the TV panel makers as the monitor panel market is also shifting to the 19/20/22-inch sizes.

Slowdown in Q4
As the holidays approach, concerns arise that sales in the United States may be negatively impacted by the slowdown in the housing market, the credit crunch and general uncertainty regarding the economy. Moreover, panel buyers usually decelerate their purchasing in Q4 due to seasonality and also to prepare for the typically slow first half of the following year.

The early "pull in" of orders means most panel purchasing activity for the holiday season is already completed, especially for the television market. This may impact panel pricing in the fourth quarter, especially near the end of the period. However, concerns about tight supplies in 2008 may lead some buyers to continue purchasing even during the slow season.

The global LCD TV panel market in 2008 is expected to expand to 10.25 crore units, up 27.2 per cent from 8.05 crore in 2007. This will mark the first time shipments will surpass the 10 crore mark.

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