WitsView sees panel price spiraling downward in July

Based on the current panel price trend, even with the support of the back to school demand and strong seasonality in the consumer electronics market, the unbalanced demand and supply will make it longer in clearing out the accumulated inventory. Thus, chances for a strong panel price rebound in 3Q08 will be low. For most panel makers, between 2007 and 2008, the profit peak appears to have occurred in 4Q07. Since then, profits have continued to drop on a quarterly basis. Monitor Panel Price The 17” is mostly used in the corporate segment. However, the global economy slowdown has made PC replacements more uncertain. Coupled by the panel and set inventory increases, panel makers are initiating further price cuts in stimulating demand. For 1HJul, the 17” will drop by $10 to $108. After the 18.5”W(16:9) entered the market, due to its comparable price level with the 17”, the 18.5”W is expected to accelerate replacement of the 17”W/17”. For the 19”W, despite demand for Moni-TV applications, the inventory adjustments by clients, growing price gap with the 17” and new competition from the 18.5” will render a $10 price drop, reaching an average of $113. TV Panel Price With downstream IT clients readjusting their inventory in June~July, some panel makers have allocated the freed up capacity to TV panels. They hope a strategic price cut in TV panels will stimulate demand in the traditional strong second half. The growth momentum for TV panels is usually stronger than IT panels in this period. As mentioned before by WitsView, prices of the various TV panel sizes were all near a benchmark in June. With prices falling further in July, coupled by the capacity increases, the average 32”HD price will fall by $10. The low average will fall past the $300 mark to$295. As prices of the 40”W/42”W fall further, coupled by weak end market demand, the average price of the 37”HD will also fall by $10 to $400. The low average will reach $395, and the price gap between the Full HD and HD versions will be between $30~$40. Notebook Panel Price After experiencing a serious panel shortage last year, which led to a rapid panel price rise, brand vendors placed strong orders to SI makers in 1H08. In addition, they also set up warehouses in making sure they were fully prepared for the hot season. However, like the monitor segment, NBs are now also facing an oversupply problem. ODM/OEM makers currently have a sufficient amount of panels and set inventory. Given the slowing monitor demand, it will give more room for the more profitable NB panels to see further price declines in securing more orders. For 1HJul, the average NB panel price drop will be $5. The mainstream 14.1”W and 15.4’W will respectively reach $90 and $93. Prices are expected to exceed below the $90 in the near future. Although the big panel price drops will help stimulate the end market demand in 3Q08, and more rapidly clear away the excess inventory, panel makers continue to maintain a near 100% glass substrate input. Thus, WitsView has some reservations as to how long it will take to bring the inventory to a more stable level. In addition, "given the higher than expected IT panel price drop, it will be hard to see a price rebound in the near term. After all, there only remains roughly 2~3 months left before the strong seasonality comes to an end. By 4Q08, the TFT-LCD industry will once again face another slowdown. Considering also the likely serious panel oversupply in 2009, it is advised that panel makers devise an effective strategy as soon as possible," said H.P. Chang, head of WitsView's TFT-LCD research team.