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LCD | December 05, 2007

Rise of LCD-TV brings seasonality to<br>large-sized LCD panel market

The large-sized LCD panel market once danced to its own tune, unaffected by seasonal factors that impacted other segments of the consumer-electronics market.
However, because of the rising demand and increasing dominance of LCD-TVs, the large-sized LCD panel market now is following a seasonal pattern similar to that seen by television manufacturers, it was revealed here yesterday at iSuppli Corp.’s Flat Information Displays (FID) 2007 conference.

Demand for large-sized LCDs, i.e. panels 10-inches or bigger in the diagonal dimension, was strong in the third quarter, with indications that sales remained healthy through November. Television manufacturers have been snapping up panels, despite increasingly tight supplies.

However, iSuppli predicts the LCD market will enter a state of oversupply in December as demand cools—a situation that will continue into the first quarter of 2008. From there, demand for large-sized LCD panels will begin to ramp up in the second quarter of 2008, with brisk sales continuing up to the fourth quarter.

This follows the seasonal pattern of the television business, with manufacturing rising in the pre-holiday season and peaking in November, then undergoing a slowdown until the second half of the year, when activity starts picking up again. The major factor driving this seasonal pattern is the television manufacturers’ Christmas build period at the end of each year. In the second quarter of 2008, LCD-TV panel demand is expected to be strong due to the Olympics.

This contrasts with the situation in the past, when oversupply/undersupply situations were driven by factors within the large-sized LCD panel business, i.e. the rate of production increases among manufacturers.

However, if you think a move toward seasonality means that a new era of predictability is at hand for the large-sized LCD panel market, think again.

“Because there are so many other factors involved in the LCD market other than television—including monitors and notebooks gaining greater acceptance in the consumer space—it won’t necessarily mean predictability is guaranteed,” said Sweta Dash, director of LCD and projection research at iSuppli, speaking at FID yesterday. “There still could be events that will make panel suppliers tighten or loosen the production reins, sending the whole market into a spiral.”

The large-sized LCD panel market is set to reach a milestone in 2008, with shipments reaching the 100-million-unit threshold for the first time. Global LCD-TV panel shipments are expected to reach 181.1 million units by 2011, rising at a Compound Annual Growth Rate (CAGR) of 27.7 percent, up from 53.2 million units in 2006.

Large-sized LCD unit shipments in 2007 will amount to 80.5 million units before hitting the milestone of 102.5 million units in 2008. In terms of revenue, LCD-TV panels will grow to $52.9 billion by 2011, increasing at a CAGR of 19.0 percent from $22.2 billion in 2006.

The last factor may represent a bone of contention for some, however, according to Dash. “Historically, the Olympics have never been much of a pull for television buyers,” Dash said. “This Olympics will be no different for the U.S. and European markets as they won’t have much of an impact. But it is in China and other parts of the Asia/Pacific region where there is likely to be a significant bump in terms of sales as people rally around hosting the Beijing games.”

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