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Electronics Production | November 29, 2006

Strong large-sized LCD Panel demand in 2007

Defying normal seasonal patterns, sales of large-sized Thin-Film Transistor-Liquid Crystal Display (TFT-LCD) panels are expected to rise during the first half of 2007 compared to the second half of 2006, according to iSuppli Corp. iSuppli defines large-sized LCD panels as those being 10-inches or more in diagonal size.
Large-sized TFT-LCD panel shipments will rise to 154.3 million units in the first half of 2007, up 23.7 percent from 124.7 million in the first half of 2006-and even up 6.3 percent from 145.2 million units in the second half of 2006. Shipments typically decline in the first half of the year compared to the second half of the previous year, making this a remarkable accomplishment for the large-sized TFT-LCD panel market.

The strong demand comes on top of a presently tight supply situation, with limited availability expected to continue throughout the fourth quarter. Consumer demand will stay strong through December due to very aggressive price reductions for monitors and LCD TVs. Despite increases since July for monitor panel prices, monitor system prices during that time have remained stable or even declined for the larger-than-19-inch models.

High inventory levels for large-sized panels that had lingered from the first half of 2006 were mostly cleared up by the third quarter. Panel suppliers, system manufacturers and channel participants are attempting to hold their inventories to lower-than-usual levels in order to avoid potential problems if holiday demand falls short of expectations.

Furthermore, panel manufacturers also are decelerating their component demand and delaying expansion plans fearing the usual seasonal sales slowdown during the first half of 2007. This cautious approach is creating a situation across the LCD supply chain that is very different from the fourth quarter of 2005, when inventory levels were very high and panel suppliers were expanding their production quickly in the hope of capitalizing on strong television sales for the World Cup in the first half of 2006.

From the demand side, LCD-TV prices are reaching the sweet spot, which may boost holiday demand and even spill over into the first part of 2007. The introduction of Microsoft Corp.'s Vista operating system also may create some additional demand for desktop PC monitor panels and notebook PC panels in the first half.

Due to the presently low level of inventories, slow panel supply expansion plans and the expected strong holiday demand boosted by low system prices, iSuppli is forecasting tight supply will continue through December and expects the first half of 2007 will be better than the second half of 2006.

Desktop stability

There are differing opinions regarding the short-term future of the large-sized TFT-LCD panel market, with some buyers and panel suppliers predicting price reductions starting in November, and others expecting prices to remain stable.

iSuppli believes price stability is the most likely scenario. Panels for 17-inch LCD monitors rose to an Average Selling Price (ASP) of $124 in October, up from $103 in July. Furthermore, the 17-inch panel price is expected to rise by a moderate 0.4 percent in November and then stabilize in December to reach an ASP of $125.

The ASP for 19-inch SXGA panels also increased in October to $144 and is forecast to remain stable, rising to only $145 by December. Demand for 19-inch wide panels is remaining strong in November and many suppliers are shifting capacity away from regular-format to wide-format monitor panels, especially away from 17-inch SXGA products.

Notebooks on the rise

Desktop PC TFT-LCD monitor panels are not the only segment that is expected to remain in tight supply in the fourth quarter of 2006. Notebook panels have experienced tightness in supply in October and November, which- combined with strong demand-has caused prices to rise. In October, notebook panel prices increased in a range of 3 to 5 percent compared to September, and iSuppli is expecting them to rise by another 2 to 5 percent in November.

Notebook PC manufacturers during the holidays are offering highly attractive low-end priced systems-some selling for less than $400. They also are offering notebooks with new features and increased performance. Because of this, higher demand for notebooks is expected in December.

The ASP for the 15-inch XGA panels and the 15.4-inch panels for notebooks rose to $102 and $103 respectively in October, which may lead to a faster shift from 14-inch to 15.4-inch panels due to the small price difference. The 14-inch XGA notebook panel and the 14-inch WXGA panel in October registered prices of $103 and $102, respectively, again causing a shift away from the 14-inch panel.

LCD televisions on the decline

The one area of the TFT-LCD panel market now seeing price declines is the large television panels—despite being in tight supply. Prices for the 40/42-inch and 45/46-inch panels declined in a range from 1.3 percent to 3.5 percent in October with average prices for these displays reported at $735 and $1,091, respectively. This small decline is expected to continue into December, helping to boost holiday demand, iSuppli predicts.

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