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Low fab loading, inventory level stabilize panel prices

Posted: 12 Apr 2007 ?? ?Print Version ?Bookmark and Share

Keywords:TFT LCD pricing? fab utilization? LCD TV panels?

TFT LCD fab utilization reduction and inventory management contributed to the slowdown in price decline of large-area TFT LCD pricing, according to DisplaySearch's latest monthly large-area LCD and PDP pricing report.

According to the report, the reduced fab loading of panel makers avoided adding to excess panel inventory during the slow first half and also responded to the financial community's concern on their profitability. Also, IT buyers managed their inventory levels to very low levels from the end of 2006 to avoid purchasing an excess of panels prior to the slow season and ahead of anticipated price declines.

As a result, notebook and monitor panel inventory is at record low levels and OEMs are hungry for panels. With insufficient supply of long lead time for materials on hand to meet large increases in volume, panel prices have stabilized and in some cases increased.

Indications in late 2006 were that 2007 would be almost mirror image of the previous year. The ASPs for notebook and monitor panels were expected to decline through the second quarter, reaching their lowest levels by third quarter, before increasing by Q4. Prices for LCD TV panels (32-inch and larger) were expected to show steady decline throughout the year.

With the prospects of another year of less-than-positive financial results looming, panel suppliers responded to calls from analysts to minimize inventory in the seasonally weak first half of the year to reduce pricing pressure, resulting in lower utilization, tighter supply and price increases earlier than expected. Panel prices are expected to rise for LCD TV panels as well as for notebook PCs and LCD monitors, the report said.

In Q4 2006, large-area panel shipments totaled just over 81 million units compared to slightly 51 million units in the first two months of 2007. In order to equal or approach the units of Q4 2006 for Q1 2007, large-area unit shipments would have to increase by more than 24 percent month-over-month. With this type of growth unlikely to occur, panel makers needed to either reduce panel output to avoid excessive inventory buildup or to sell substantially more or larger panels to avoid a panel glut and further price erosion.

The result of the reduced fab utilization is flat month-over-month prices for most notebook panels and increasing prices for 17-inch and 19-inch monitor panels as shown in Table 1. LCD TV panel price reductions are also slowing with price increases for some sizes in May.

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