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Optoelectronics/Displays??

LCD panel oversupply to trigger price cuts

Posted: 25 Aug 2004 ?? ?Print Version ?Bookmark and Share

Keywords:lcd panel? isuppli/stanford resources? notebook pc?

A combination of slower than expected demand and an onslaught of new fab capacity has created an oversupply of large LCD panels, likely stimulating price cuts for at least another quarter, says market research firm iSuppli/Stanford Resources.

In a report titled "Global LCD Supply/Demand", the firm notes that 10-inch and larger panels used in notebook PCs, desktop monitors, and LCD TVs, went into a 6.4 percent oversupply in the second quarter, with 33.2 million panels produced, but demand (sales) of 31.1 million panels.

iSuppli expects the LCD supply/demand balance to skew further into oversupply, reaching 9.3 percent during third quarter, sparking further price cuts. These cuts are expected to help stimulate sales as the holiday buying season approaches, reversing the current oversupply to a slight undersupply by the fourth quarter, the firm said.

According to iSuppli, bulging distribution channel inventories for LCD desktop monitors are slowing panel demand. In addition, demand for notebook and LCD TV panels was softer than expected the first half of the year, with LCD TV panel cuts not significant enough to trigger the buying spree anticipated.

Alternating cycles of robust demand and tight supply followed by slack demand and oversupply have long characterized the LCD industry. During the most recent up cycle, supply constraints caused LCD prices to rise for nearly five quarters before reversing during the second quarter, said iSuppli.

Also exacerbating the panel glut is a wave of new fab capacity coming online. iSuppli noted that eight new LCD fabs are expected to start production in 2004, with Japan-based Sharp and Taiwan-based AU Optronics having already launched their plants.

The onslaught of new fab capacity shows no signs of easing. Another study, by The Information Network, projects global spending in TFT-LCD panels to reach $4.8 billion in 2004 and nearly $6 billion next year.

iSuppli's findings follow a report last month by Austin-based DisplaySearch Inc, citing a similar trend of overproduction and price cuts by LCD suppliers.

- Spencer Chin

EE Times





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