It’s confusing. Small and medium panel sales are up, but some makers are cutting back on expansion plans. Some monitor panels are selling at below cost, and monitor sales are up only slightly, even in the run-up to the holiday season. Flat-panel TVs are selling better than ever, but panels are selling at low margins, and some makers are expected to see red ink soon — if they’re not already. Plans for Gen 10 and 11 fabs are moving forward, but some nearer-term expansion plans are slowing down.

Ken Werner
Senior Analyst and Editor

And September sales figures for U.S. retail chains are now in, with year-on-year sales down 5 to 15% for a wide range of retailers. As Dean Hillier, a retail specialist at management consulting firm A. T. Kearney, told Stephanie Rosenbloom of the New York Times, the coming Christmas shopping season "could quite frankly be one of the worst we’ve seen in 25 years."

One of the tricks we use to see past all the trees and get a good overview of the forest is to look at what the industry’s suppliers of key materials and components are doing. Their sales and sales projections are averaged over many panel makers and many display types. When the supplier is Corning, which provides approximately 60% of the display glass used by the global LCD industry, you get a view of the forest’s health from 30,000 feet.

A Corning press release issued yesterday quoted company Vice Chairman and CFO James B. Flaws as saying Corning is now forecasting growth of 15-25%, down from its previous estimate of 20-25%. Flaws commented the revised projection means the LCD glass market will grow to between 2.65 and 2.9B square feet next year from about 2.25B square feet this year.

Although the upper limit of the range remains unchanged, Corning is clearly taking the reduction in the lower limit very seriously. The company has decided to delay construction and ramp-up of the fourth phase of its Taichung glass plant until later in 2010. Tanks scheduled for maintenance in Q4 and later may be kept off line for an extended period, and other tanks may be idled as market conditions dictate.

Corning’s total capex for 2008 and 2009 will now be $400M to $600M lower than originally planned. This year’s capex is now expected to be between $1.8B and $1.9B, and next year’s is expected to be between $1.6B and $1.7B.

The supply of polarizers is more widely distributed than display glass, with Nitto Denko, Optimax, LG Chemical and Sumitomo being the major suppliers. Taiwan-based Optimax has announced plans to downsize the company because of the worldwide economic downturn, Susie Pan and Yvonne Yu reported today in Digitimes. The company said it is planning to sell off idle plants and equipment, suspend three production lines at its Pingchen plant, and cut personnel, with 500 people already laid off.

Optimax is also trying to negotiate with lenders to extend its loans and reduce interest rates, Pan and Yu said, quoting industry sources. Optimax’s current assets are NT$2.8B, with short-term loans of NT$2.4B. The company is expected to repay about NT$1.2B over the next year, the sources said.

Skypola, a small Taiwan-based JV between Japanese specialist polarizer maker Polatechno and the Taiwanese CID Group, plans to lay off most of its employees, retaining only enough technical staff for basic production, sources said. Skypola began production 2006 and has only one polarizer production line.

At large suppliers and small, the view from 30,000 feet isn’t pretty. The forest is hurting as much as the trees.