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LCD market to bounce back

Posted: 21 Aug 2008     Print Version  Bookmark and Share

Keywords:large-sized LCD panel  desktop PC monitors  notebook PCs  LCD-TVs 

The large-sized LCD panel market will recover in September after almost three months of falling profits and steep price plunges, iSuppli Corp. predicts. "The large-sized LCD panel (with diagonal screen dimension of 10 inches or larger) market has been mired in a state of severe oversupply since the start of June, due to lower-than-expected panel demand and high inventory levels throughout the supply chain," said Sweta Dash, iSuppli director of LCD and projection research. "Conditions have worsened in August, with poor economic circumstances causing prices to decline at an even faster pace than before. However, panel production cuts, combined with the clearance of inventory and a recovery in demand from televisions, desktop PC monitors and notebook PCs are expected to shift the supply/demand equation back to balance in September. This will lead to a recovery in pricing."

LCDs suffer June swoon

After rising by 6.9 per cent in May, global large-sized LCD panel unit shipments declined by 9.6 per cent sequentially in June. Prices dropped by 4 to 7 per cent for mainstream notebook, monitor and TV panels from May to June and another 3 to 15 per cent in July. A decrease by 4 to 20 per cent for the entire month of August is also expected.

Because of this, large-sized panel prices now are approaching the manufacturing-cost level, especially for some television and many monitor panels. However, panel suppliers and equipment makers moved quickly this year to adjust to weakening market conditions. "Reacting to weak sales and declining profitability, panel suppliers began to slash their utilisation rates starting in July," Dash noted. LCD-TV and desktop PC monitor manufacturers are starting to cut prices to reduce inventories and boost demand. These moves, along with recovering notebook market, will stabilise large-sized LCD panel pricing in September. An increase by 1 to 3 per cent is even possible, especially those which are reaching cost levels.

No Olympic gold for LCDs

Consumer and corporate spending in the United States and worldwide slowed down due to falling housing prices, struggling financial markets, a slowdown in the job market and rising inflation. Despite the boost from the U.S. government economic stimulus package, concerns are rising regarding second-half economic growth.

China's consumer spending on LCD-TVs was expected to be strong this year due to the impact of the Summer Olympic Games in Beijing. However, China suffered natural disasters in the first half of 2008 that have dampened consumer sales. In general, the Olympic sales pickup in China and elsewhere fell short of expectations.

On the supply side, LCD makers in the first half of the year shifted production of television panels away from sixth-generation fabs and into seventh-, 7.5- and eighth-generation facilities. Eighth-generation fabs are capable of producing large-sized panels much more efficiently than sixth-generation factories, boosting productivity throughout the industry. This rising production contributed to declines in average LCD-TV panel prices throughout 2008, falling by as much as 15 to 20 per cent from the start of 2008.

Monitoring monitors

LCD monitor panel prices for desktop PCs have already fallen by 20 per cent to 25 per cent since May. Panel suppliers reported about one to two weeks of excess monitor module inventory in July. Channel participants and brand vendors also reported two to three weeks of extra inventory in July.

Branded vendors in Europe and parts of North America have started cutting prices to reduce inventories. Because of this, orders for finished monitors began to increase in August and are expected to rise again in September.

Notebook troubles

Notebook panel prices have fallen by 12 per cent to 16 per cent since May. Second-quarter sales for notebook PCs were lower than expected, due to the increasing cost of key components, tight supplies in some other parts such as batteries and order adjustments made for mid-year inventory.

While orders continue to be cut, the end-market demand remains to be the most resilient among large-area panel applications. Notebook OEMs and ODMs are still expecting at least 15 per cent to 20 per cent sequential growth in unit shipments in the third quarter due to strong end demand.

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