Large-area TFT LCD panel price increases halted in mid-June due to an uncertain demand outlook for Q3’11. While demand is slowing down, especially in the TV market, the supply side is making adjustments to prevent drastic panel price fluctuations. Panel makers originally expected to raise capacity utilization—the ratio of actual output to total available capacity—to an average of 90% in Q3’11. However, as indicated in the July edition of the DisplaySearch MarketWise-LCD Industry Dynamics, TFT LCD capacity utilization will remain at 85% from July to September.
The average large-area TFT LCD capacity utilization fell in Q1’11. After reaching 79% in April, panel makers increased rates through Q2’11 to meet a surge in demand, and by June the rate had reached 85%. Panel makers were planning to increase capacity utilization in Q3’11, but this has changed in response to market conditions.
According to Deborah Yang, Research Director for DisplaySearch, “As TFT LCD panel makers became aware of weakness in the market, they changed their Q3’11 fab utilization plans in an effort to maintain light inventory and control production, in the hopes of stabilizing panel prices, especially now that global TV brands have encountered sales challenges in some regions.” Yang added, “Reducing capacity rates reflects the trade-offs panel makers must make between over-supply and falling prices on the one hand, and increased depreciation costs at low utilization rates on the other.”
According to DisplaySearch, although panel makers are anticipating increasing demand from China TV brands, together with the emergence of some seasonal demand in Q3’11, overall fab utilization will not increase.
The June issue of the DisplaySearch MarketWise-LCD Industry Dynamicsreport includes these additional findings:
In June, overall LCD TV panel shipment targets increased 6% M/M, but were still 7% less than the previous forecast due to order adjustments from TV brands.
Looking ahead to Q3’11, the traditional seasonality remains, but most panel makers are becoming cautious given that the TV market atmosphere seems to be negatively influenced by the unfavorable macroeconomic situation, especially in developed regions.
The inventory level at the end of June for LCD TV panels was 7-8 days, with the monitor panels at 7 days, and mobile PC panels at 6 days, all healthy levels.
In May, panel makers’ shipments to China TV makers were 4.24 million, up 8% M/M. This exceeded the previous DisplaySearch forecast by 7%. Shipments are projected to be 4.37 million in June, up 3% M/M.
Chimei Innolux continues to lead the China TV panel market with 35%, followed by Samsung with 21%, AUO with 20% and LG Display with 16%.
Chinese TV makers are positive about the demand outlook in China following good sales results during the May Day holidays. Industry checks indicate that Chinese TV makers kept their order forecasts almost unchanged throughout the forecast period; • LCD TV panel shipments to Chinese TV makers are stable and expected to increase before possibly reaching a peak in August.
LCD TV OEM and ODM makers, including Foxconn, Chimei Innolux, TPV, Compal and AmTRAN, plan to increase their production in August and September by 21% and 15% respectively.
Contact Charles Camaroto at 1.888.436.7673 or 1.516.625.2452, e-mail email@example.com or contact your regional DisplaySearch office in China, Japan, Korea or Taiwan for more information.