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Large LCDs fail to catch Olympic fever

Posted: 22 Aug 2008 ?? ?Print Version ?Bookmark and Share

Keywords:LCD panels? Olympics? TVs?

The expected sales boost of large-sized LCD panels because of the Olympics' boom in new TV purchase failed to materialize but the sales' recovery in September is anticipated, according to iSuppli Corp. providing relief after nearly three months of plummeting profitability and precipitous price plunges.

"The large-sized LCD panel market has been mired in a state of severe oversupply since the start of June, because of the lower than expected panel demand and high inventory levels throughout the supply chain," said Sweta Dash, director of LCD and projection research, iSuppli.

Dropping prices
"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 TVs, desktop PC monitors and notebook PCs are expected to shift the supply and demand equation back to balance in September," the director added.

China's consumer spending on LCD-TVs was expected to be strong this year because of the impact of the Summer Olympic Games in Beijing. However, China suffered natural disasters in 1H 08 that have dampened consumer sales. In general, iSuppli noted that the Olympic sales pickup in China and elsewhere fell short of expectations.

LCD makers in 1H 08 shifted production of TV 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 percent from the start of 2008.

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

"Reacting to weak sales and declining profitability, panel suppliers began to slash their utilization rates starting in July," said Dash. "LCD-TV and desktop PC monitor manufacturers also are starting to cut their prices to reduce inventories and boost end-user demand. These developments, along with recovering demand from the notebook segment, will bring stabilization to large-sized LCD panel pricing in September. Some panel prices may even increase by 1 to 3 percent especially those that reach at par or below the cost levels."

LCD monitor panel prices for desktop PCs have already fallen by 20 percent to 25 percent 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.

Notebook panel prices have fallen by 12 percent to 16 percent since May. Q2 sales for notebook PCs were lower than expected, because of the increasing cost of key components, tight supplies in some other parts such as batteries, and order adjustments made for mid-year inventory.

Notebook OEMs and ODMs still are expecting at least 15 percent to 20 percent sequential growth in unit shipments in Q3 because of strong demand.

iSuppli defines large-sized LCD panels as those having a diagonal screen dimension of 10 inches or larger.

- Colin Holland
EE Times Europe





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