Tags: Frontline, LCD, TFT, TFT-LCD, WitsView, witsview.com

Taipei, June 6, 2008—As stated in WitsView’s Frontline report this week, the market sentiment towards the TFT LCD market is filled with uncertainty. Based on previous crystal cycles, the market usually begins to experience a slowdown after November of each year. However, changes or perhaps distortions in the market fundamentals have been seen for 2007 and 2008. Thus, in the analysis of the future market trend, the main focus should return to the current market demand and supply status.

In essence, the 2008 TFT-LCD market trend has been affected by the following factors:

1.

Amid the likelihood of panel prices rising again in 2Q08, downstream vendors stocked up on inventory ahead of the possible increase. Based on the 1Q08 PC panel shipment figures, the traditional weak seasonality was indeed stronger than usual.

2.

Due to the brisk PC panel shipments in 1Q08, panel makers began to aggressively raise their price quotes in Apr08. However, in contrast to last year, PC panel prices were already at a relatively high base level. 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 growing inflation problems, the global economy is under stress.

4.

Due to the slow season, demand is currently particularly weak in the TV, small to medium sized and PC end markets. But 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 unexpectedly impacted by the unfortunate 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 the panel procurement in 4Q08.

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 2H08. 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 in the end of June.

Monitor Panel Price Update

As the 17” market share is rapidly losing ground to the widescreen products, panel makers are gradually reducing supply. Given the weaker market demand and rising inventory of the 17”, prices will slip by $2 to $121. When the 16:9 18.5”W begins mass production in 2H08, it will further squeeze the 17”. The 19”, another size targeted mainly at the corporate segment, is also experiencing a replacement effect—mainly from the more cost competitive 20.1”W. Currently supplied by Hannstar and LG..D, the price of the 19” is strongly correlated to the demand and supply changes. Prices are set to drop by $2 to $141. Separately, although demand for the 19”W 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”W enters mass production, the pressure on the 19”W will grow, as the former is expected to replace some of the latter’s market share. For the 20”W, as the price increase in April was higher than the other sizes, it squeezed the downstream clients’ profitability. To ensure stable orders, the 20”W is set to fall by $2 to $140. The 20”W is expected to continue replacing the market share of the 19”. Some panel makers are also trying to retain stable orders for the 22”W, and increase adoption of its MTV format. As the 22”W is also being challenged by the 16:9 21.5” and 23”W, 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 17W (16:10) will drop slightly to $110~113, due to limited output and a more balanced market demand and supply. Finally, the 24W (16:10) is facing bigger price pressures, due to the introduction of the 24”W (16:9). 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 2H08. The price corrections are expected to be between $5~$15. Price quotes for the 46”W/47”W FHD panels will be near the $700 level. Meanwhile, the 40”W/42”W HD will fall past $500, while the 32”W/37W HD will respectively approach the $300 and $400 level. Due to the 40”W/42”W price falls, to spur more demand and maintain a certain market share for the 37”W, panel makers will also strategically lower its price. For the 32”W, 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”W TN from its new G6. Amid slowing demand, the demand and supply is growing more unbalanced. Coupled by the introduction of the 26”W VA model, prices of the 26”W TN will be strategically lowered by $5 to $225, in order to expand the client base and stimulate more demand.

Notebook Panel Price Update

As mentioned in last month’s Market Status Update report, the ODM/OEM’s inventory levels are currently sufficient, while the NB brand vendors are trying to pare down their own product inventory. Thus, given the current monitor panel price corrections, the NB segment is facing some pressure, as well. Coupled by sagging sales in the small to medium-sized end market, the G5’s panel production (NB panels mainly produced in the G5 now) is more than adequate. In general, NB panels will slightly drop by $1~$2 for June. Panel makers are also aggressively trying to promote the16:9 and low-cost LED NBs via an attractive pricing strategy. Examples include the already mass produced 16”W and 15.6”W. Meanwhile, by observing this year’s 2008 Computex show, both the Tier 1 and Tier 2 brand vendors are aggressively promoting the 8.9” low-cost NB. Such products are expected to spur another wave of mini NBs in the market.

Up until now, WitsView still holds an upbeat outlook towards the consumer electronics market during the second half’s traditional strong seasonality. Reasons 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 the sales promotions are successful, the TV panel demand will grow sharply in 2H08. For the second half, demand is also expected to rise in Europe, as the region gradually bottoms out from the traditional slow season. The 2009 analogue broadcast shutdown in the US 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 in Jun08, 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 July08, there is a chance to see PC panel prices rising again.

Panel Price List in 1H of Jun/2008 ( Prices are all in USD ) 　
　
Source: www.witsview.com 　 　
Application Screen size Format Resolution Price 　
Low High Avg. Change* Last Avg. Change*
　 　 　 　 　 　 　 　 　 　
TV 42” WXGA 1366×768 500 510 505 -5 510 -1%
37” WXGA 1366×768 405 425 420 -5 425 -1%
32” WXGA 1366×768 305 320 315 -5 320 -2%
26”(TN) WXGA 1366×768 220 230 225 -5 230 -2%
　 　 　 　 　 　 　 　 　 　
Monitor 22″W WSXGA+ 1680×1050 155 160 158 - 158 -
20.1″W WSXGA+ 1680×1050 138 142 140 -2 142 -1%
19″ SXGA 1280×1024 139 144 141 -2 143 -1%
19”W WXGA+ 1440×900 123 127 125 -2 127 -2%
17” SXGA 1280×1024 119 123 121 -2 123 -2%
　 　 　 　 　 　 　 　 　 　
Notebook 17”W WXGA+ 1440×900 117 124 122 -1 123 -1%
15.4”W WXGA 1280×800 97 100 99 -1 100 -1%
14.1”W WXGA 1280×800 93 97 96 -1 97 -1%

AboutWitsView

Founded in the year 2004, WitsView, a subsidiary brand of DRAMeXchange, is composed of a team of TFT-LCD industry experts. The research field covers the development and market trend of upstream components, mid stream panels and downstream system integrators and retailers.
For more about WitsView, please visit www.witsview.com

Ends

Media contact:
Lilia Huang
Tel: +886-2-7702-6888 ext.680
liliahuang {at} witsview(.)com