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Electronics Production | February 05, 2007

Despite production cuts, large-sized<br>LCD panel prices plunge

A major slowdown in demand for large-sized TFT-LCDs in December for all applications-televisions, monitors and notebooks-triggered a faster-than-expected fall in panel prices for the month and for January, according to iSuppli Corp.
Price erosion is expected to continue through the first quarter because of the seasonally slow market conditions. However, monitor and notebook panel prices may stabilize by the end of the second quarter, iSuppli predicts. Television panel prices, on the other hand, will continue to
decline through the second quarter due to increased production from newer-generation LCD fabs.

LCD monitor panel prices in January fell by 4 to 6 percent, notebook panel prices declined to 2 to 4 percent and LCD-TV panel prices decreased by 3 to 8 percent compared to December.

Although LCD-TV demand continues to be strong due to Super Bowl sales and the holiday season in Asia, most retailers and television manufacturers are continuing to reduce post-Christmas inventories to prepare for an expected slow first half of 2007. This is actually making the oversupply situation worse in January, causing prices to continue to plummet, according to iSuppli.

Slow seasonal sales and oversupply in the first quarter of 2007 will push prices to less than the $300 level for 32-inch LCD TV panels in March, which is below the manufacturing cost level, iSuppli believes. Many suppliers are continuing to cut their utilization rates at fabs that are producing these types of panels in order to stave off any further rapid price declines.

Prices for 37-inch television panels are experiencing a stronger rate of reduction than the 40/42-inch television panels. Suppliers are cutting 37-inch pricing in a bid to boost demand. This may bring the 37-inch price closer to that of the 32-inch panels in the coming months.

The figure below and attached presents iSuppli's forecast of TFT-LCD TV panel pricing for the period from July 2006 through March 2007.

Continued inventory control efforts by monitor suppliers reduced panel demand and led to significant price reductions in January. Prices for the 19-inch wide and 17-inch standard panels fell by 6 percent in January compared to December, reaching an average price of $123 and $113, respectively. Meanwhile, prices for 15.4-inch and 14-inch WXGA notebook panels fell 3 percent and 4 percent in January, respectively, compared to the previous month, reaching average prices of $97 and $94 in January.

While iSuppli expects mainstream monitor and notebook panel prices to fall in the first quarter of 2007, pricing should stabilize by the end of the second quarter. This is because panel suppliers appear to be more cautious about capacity expansions and cutting utilization rates to control inventories.

Most buyers have very low inventories, so any rise in demand may lead to increased panel purchases. The figure below and attached presents iSuppli's forecast of TFT-LCD monitor panel pricing for the period from July 2006 through March 2007.

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