iSuppli: Large-size panel prices nosedive, but stabilization to come in 2H
We have written a number of times about the LCD panel market. LCD panels are used in flat-screen monitors and televisions, and despite rapidly rising demand the supply is more than the market can support. Research firm iSuppli: has now weighed in, as reported by DigiTimes: Large-size panel prices nosedive, but stabilization to come in 2H.
Swelling inventories and disappointing demand from all applications are causing prices for large-sized panels to plunge in the first half of the year, with no relief expected until the second half, according to iSuppli.
Prices are falling for large-size panels used in notebooks, monitors and TVs. In some applications, including monitors, prices are falling to parity or below manufacturing cost levels for certain suppliers.
The oversupply situation worsened in April in the TV panel segment because inventories started building up in Europe in the first quarter due to slower-than-expected TV sales associated with the Winter Olympics.
This is placing an additional burden on the large-size panel market, which already was struggling with slower-than-expected notebook and monitor sales in the first quarter.
At the same time, most panel suppliers are continuing to expand their capacity, and are not cutting utilization rates or reducing production. Typically, large-size panel suppliers reduce their manufacturing utilization rates and slow their panel output during periods of oversupply. However, this year, most of them are maintaining their high production levels. This is because cutting production would actually increase their costs and impact their already-slim profit margins due to their huge investments in new production facilities.
In our previous commentary we said that falling panel prices hurt manufacturers like Corning (GLW.) However, the cheaper prices aren’t usually passed on as quickly to consumers, so PC makers like DELL (DELL), Hewlett Packard (HPQ - Annual Report) and Apple (AAPL) should see a margin boost for a couple of quarters.
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