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PC panel prices to wobble in June, says report

Posted: 12 Jun 2008 ?? ?Print Version ?Bookmark and Share

Keywords:TFT LCD market? industry report? PC panel price?

According to WitsView's Frontline report, the ample stock of LCD panels currently in the hands of downstream clients is pushing panel makers into a tight corner in the panel price negotiations. Given the slow demand, TV panel prices will continue to fall this month, which hopefully will boost demand in 2H 08. Meanwhile, as June marks another quarterly end and is the period for mid-year inventory accounting, the seller side is trying to maintain the sales volume, while the buyer side is focusing on lowering their inventory. Thus, additional PC panel price increases will face enormous challenges. Prices are expected to fluctuate and fall slightly by end of June.

Market update
Based on previous crystal cycles, the market begins to experience a slowdown after November of each year. However, changes or distortions in the market fundamentals have been seen for 2007 and 2008, noted WitsView.

The 2008 TFT-LCD market trend has been affected by several factors:

1. Amid the likelihood of panel prices rising again in Q2 08, downstream vendors stocked up on inventory ahead of the possible increase. Based on the Q1 08 PC panel shipment figures, the traditional weak season was stronger than usual.

2. Due to brisk PC panel shipments in Q1 08, panel makers began to aggressively raise their price quotes in April. Unlike last year, PC panel prices, however, were already relatively high. In addition, amid the slow season, the weak end-market demand resulted in limited panel price increases.

3. As more time is needed in solving the credit crisis, coupled by rising oil prices, food crisis and inflation problems, the global economy is under stress.

4. Due to the slow season, demand is particularly weak in the TV segment, small to medium-sized and PC end-markets. At the same time, the panel output continues to grow.

5. The expected sales increase from China's Lunar New Year and Labor Day holidays were impacted by snowstorm and earthquake events. Transportation links to some regional retailers were seriously disrupted, causing a rise in inventory levels.

6. After enjoying a banner year in 2007, panel makers are once again aggressively investing in new generation production lines. The possibility of an oversupply in 2009 has already surfaced, which could subsequently affect panel procurement in Q4 08.

Monitor panel price update
As the 17-inch market share is rapidly losing ground to the wide-screen products, panel makers are gradually reducing supply. Given the weaker market demand and rising inventory of the 17-inch panels, prices will slip by $2 to $121. When the 16:9 18.5-inch devices begin mass production in 2H 08, it will further squeeze the 17-inches. The 19-inch displays, another size targeted mainly at the corporate segment, is also experiencing a replacement effectmainly from the more cost-competitive 20.1-inch devices.

Currently supplied by Hannstar and LG, the price of the 19-inch segment is strongly correlated to the demand and supply changes. Prices are set to drop by $2 to $141. Separately, although demand for the 19-inch devices is underpinned by the MTV demand, the downstream clients' inventory adjustments are dragging down some demand. The price pressure will result in prices to drop by $2 to $125. When the 18.5-inch enters mass production, the pressure on the 19-inch will grow, as the former is expected to replace some of the latter's market share. For the 20-inch, as the price increase in April was higher than the other sizes, it squeezed the downstream clients' profitability. To ensure stable orders, the 20-inch is set to fall by $2 to $140. The 20-inch is expected to continue replacing the market share of the 19-inch. Some panel makers are also trying to retain stable orders for the 22-inch, and increase adoption of its MTV format. As the 22-inch is also being challenged by the 16:9 21.5-inch and 23-inch, it needs to be sold at a competitive price. For June, the low and high average will drop respectively by $2 and $3, while the average will stay flat. Meanwhile, the 17-inch sector (16:10) will drop slightly to $110~113, due to limited output and a more balanced market demand and supply. Finally, the 24-inch segment (16:10) is facing bigger price pressures, due to the introduction of the 24-inch (16:9) devices. The average price will fall between $215~$220.

TV panel price update
For June, the TV panel price is still under the influence of the weak seasonality. Panel makers hope that by strategically cutting prices, it can stimulate the TV demand in 2H 08. The price corrections are expected to be between $5~$15. Price quotes for the 46-inch/47-inch FHD panels will be near $700.

Meanwhile, the 40-inch/42-inch HD will fall past $500, while the 32-inch/37-inch HD will respectively approach $300 and $400. Due to the 40-inch/42-inch price falls, to spur more demand and maintain a certain market share for the 37-inch, panel makers will also strategically lower its price. For the 32-inch, given the increased production from the G7 and above, the weak seasonality has created a market oversupply. Separately, CMO continues to ramp up production of the 26-inch TN from its new G6. Amid slowing demand, the demand and supply is growing more unbalanced. Coupled by the introduction of the 26-inch VA model, prices of the 26-inch TN will be strategically lowered by $5 to $225, to expand the client base and stimulate more demand.

Notebook panel price update
The ODM/OEM's inventory levels are currently sufficient, while the notebook brand vendors are trying to pare down their own product inventory. Thus, given the current monitor panel price corrections, the notebook segment also is facing some pressure. Coupled by sagging sales in the small to medium-sized end market, the G5's panel production (notebook panels mainly produced in the G5 now) is more than adequate. In general, notebook panels will slightly drop by $1~$2 for June. Panel makers are also aggressively trying to promote the16:9 and low-cost LED notebooks via an attractive pricing strategy. Examples include the already mass produced 16-inch and 15.6-inch. Meanwhile, by observing this year's Computex show, both the Tier 1 and Tier 2 brand vendors are aggressively promoting the 8.9-inch low-cost notebook. Such products are expected to spur another wave of mini-notebooks in the market.

WitsView still holds an upbeat outlook towards the consumer electronics market during 2H 08's traditional strong seasonality. Driving these outlook include continued inventory drops in the China TV makers, a new sales promotion ahead of the 2008 Olympics and the current price war being waged between Sony and Samsung in the North America market. If sales promotions are successful, the TV panel demand will grow sharply in 2H 08. For 2H 08, demand is also expected to rise in Europe, as the region gradually bottoms out from the traditional slow season.

The 2009 analog broadcast shutdown in the U.S. will also prompt people in buying a new LCD TV. Separately, if the oil price bubble bursts, it should help improve the global economy and encourage consumers to open their wallets. Despite the TFT LCD industry still impacted by the weak seasonality this June, panel makers are still enjoying relatively good profits. The price drops this month should help stimulate the future market demand. When the panel demand grows stronger in July, there is a chance to see PC panel prices rising again, concluded WitsView.

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