DisplaySearch’s Deborah Yang has posted an analysis of the firm’s recent MarketWise LCD industry dynamics report on the DisplaySearch Blog (http://tinyurl.com/mtagcxl). As well as LCD panels, she also covers components.
- Realistic supply and demand is balanced for LCD glass makers. Three new G8 fabs will begin operation in China this year. Corning is supporting BOE’s at 100%; NEG is supporting CEC Panda’s at 100%; and Asahi Glass is supporting CSOT’s at 100%. The cover glass thickness requested by Chinese panel makers (0.4t) could be problematic for these fabs.
- Poalriser supply will be balanced tightly through next summer, due to the tight supply of protection and COP films.
- Although leading global TV brands want to maintain aggressive shipment targets, high panel prices have lowered their profitability. TV makers are also facing currency issues in Russia and South America.
- Some brands have maintained their aggressive TV procurement plans for strategic reasons – this has been the most critical swing factor for the LCD TV panel shipment outlook and panel pricing in Q2’15. DisplaySearch has not ruled out the possibility of a sudden and significant correction in late Q2.
- TV makers’ available panel inventories are expected to remain reasonable until the end of March, but most makers are booking panel allocations less-aggressively for Q2. UltraHD TV panel shipments have also slowed lately, due to inventory issues. Makers are, however, still requesting certain targeted panel prices for Q2 and Q3, so that they can maintain aggressive shipment forecasts. If they cannot secure these concessions, some makers will cut or delay their demand forecasts.
- Aside from the top brands, most TV makers are becoming conservative. Their purchasing will remain mostly flat or drop QoQ, as they are concerned about the downward trend in panel prices and the risk of demand adjustments. This includes the top six Chinese brands, which plan to cut TV panel demand by 3% – 5% QoQ in Q2.
- DisplaySearch data shows that the supply for 32″, 55″ and UltraHD panels is loose. Prices fell in March. However, the supply for 42″ and 43″ units remains tight due to the transition from 42″ to 43″. LGD and AUO are the only 43″ producers.
- Panel makers are still working to lower the cost of UltraHD modules, due to rising demand. There is a risk of excess supply in Q2, for several reasons. Channels are concerned about rising inventories; consumers have become more price sensitive due to a lack of promotional periods; and fab utilisations have – so far – remained unchanged between Q1 and Q2, due to TV makers’ purchasing plans. This could reverse when makers have to adjust orders due to a difficult business environment, however.
- BOE is considering building two G8 fabs (in Xiamen and Mianyang), so its G10 project could be postponed.
- In monitors, panel inventories still exist, so panel sell-out is challenging, leading to incentives and deals. DisplaySearch expects demand to remain weak in Q2. Brands lowered panel purchasing in February, and only 23.8″ and 24″ remain stable due to limited capacity.
- Korea panel makers are promoting PLS, VA and TN monitor panels and have already engaged in projects with main customers under concession deals. Weak demand in Q1’15 and competition made sales very difficult.
- Some OEMs are reallocating their production locations. Compal plans to close its fab in Chongqing and move notebook production to South Asia, such as the Philippines. The notebook supply chain cluster may also move to this area, slowly, and the lead position of the notebook PCs production base in China could be challenged.
