SMD panels see weak demand
SMD panels, which range in size from 1.0 inches to 9 inches, are used in a variety of popular consumer items, including smartphones, tablets, digital still cameras and personal navigation devices. Nearly all of these displays employ liquid crystal display (LCD) technology.
“SMD demand in May was impacted by declining sales to the cellphone market—the leading application for such displays—along with other key areas, including digital still cameras and portable navigation devices,” said Vinita Jakhanwal, director for small and medium displays at IHS. “The only exception was the tablet market, where demand continued to exceed supply.”
Cellphone market suffers in the short term
Suppliers of SMDs for cellphones in May trimmed their forecasts in light of weaker-than-anticipated handset shipments from Nokia and Research In Motion. Both companies have been under intense pressure because of strong competition from Apple Inc.’s iPhone as well as from handsets based on the Android operating system.
Handset panel shipments to China during the period were also disappointing, with officials in the country cracking down hard on an illegal gray market estimated at 255 million units this year, according to an IHS iSuppli China Research Service report. No relief appears in sight, with the gray market in China projected to decline starting next year
The market for SMDs in digital cameras continues to be impacted as panel supplies are shifted to the more lucrative smartphone and tablet spaces. Meanwhile, the portable navigation device segment continued to shrink steadily.
This is expected to be a short-term slowdown, with shipments set to rise for the entire year and during the following years.
Happy tablets for SMDs
The one positive aspect in the SMD market is the fast-growing demand from the tablet segment. Along with their high shipment growth, tablet displays command a relatively high price compared to SMDs in other applications. This is because of their high specifications required for advanced performance.
Taiwanese vendors will start mass-producing for Apple iPad panels starting in the third quarter, while Korean vendors have aggressive plans for capacity expansion to meet demand for PC-type tablets, such as Hewlett-Packard’s TouchPad.
Fearing possible component shortages after the Japan quake disaster in early March, branded vendors and channels pulled in SMD shipments ahead of time to bolster stocks. However, with inventory in the channel building up and in light of endemic weak demand, panel shipments could not recover and declined in April and May. The uncertain picture in Europe, with rising inflation and sovereign debt issues, was also a contributing factor to the SMD panel decline in general during the period.