Tight LCD supply triggers handset shortage

With the tight supply of LCDs, a recent report by SG Cowen Securities Corp. found a sudden shortage of handsets in the U.S. market.

The apparent shortage "is in the millions of units," said Matthew Hoffman, an analyst with SG Cowen. "We have confirmed with multiple contacts at the distributor and handset OEM level that key U.S. operators are now scrambling to procure enough handsets to meet expected demand in the United States for Q4," he said. "We expect this sudden change in the environment—from excess to shortage, especially in GSM—will be positive for handset pricing and unit sales in the short term."

According to Hoffman, there are various reasons for the shortfall. "There are conflicting stories about the reason for the tightening of supply. One contact pointed to an issue with LCD supply." He added that there also appears to be a shortfall of "GSM channels."

On the other hand, some handset vendors are doing better than others. "With Samsung's strong product line-up reportedly sold out for the next few months, we look for [Nokia and Motorola] to be in position to reap higher unit sales," he said.

"With supplies suddenly tighter, we expect OEMs to get more selective about mix. New models like the Motorola RAZR2—a device we have been lukewarm on—may see increased interest as a result of the situation we see evolving in 4Q 2007," he added.

- Mark LaPedus
EE Times