Electronics Production | April 04, 2009
Despite rising demand, small/medium display pricing falling
After three months of decline, small/medium LCD displays in February experienced a pick-up in sales driven by the Chinese market, with local Chinese mobile handset makers increasing their demand, according to iSuppli. iSuppli defines small/medium TFT-LCDs as those having a diagonal dimension of 9-inches and less.
“Rebates being offered by the Chinese government and operators to promote rural sales of electronics goods, including mobile phones, are boosting domestic demand. Furthermore, handset inventory levels are running low, and vendors are looking to procure components in order to build new products,” said Vinita Jakhanwal, principal analyst, small/medium displays, for iSuppli. “While this is good news, it is not sufficient to stave off a decline in prices for these displays amid today’s tough economic environment, according to data from iSuppli’s Small/Medium Displays PriceTrak Service.” Prices for displays used in mobile applications like wireless handsets are expected to decline at an average rate of 5 percent per quarter in 2009. Global top-tier handset vendors are projecting lower-than-expected sales for 2009 than were previously forecast. The attached figure presents iSuppli’s forecast of sequential quarterly mobile handset display price changes in 2009. Many display suppliers, especially in Taiwan, are attempting to increase their market share and penetration, especially as the Japanese suppliers struggle. In order to win new projects, suppliers are likely to be more competitive on pricing. For mobile handset displays, suppliers are able to reduce the cost of panel production because they are using fully-depreciated fabs. Medium panels shifting “The medium-sized panel market is still working its way through clearing excess inventory,” Jakhanwal said. “The netbook PC market also is witnessing a rapid shift to larger display sizes. Suppliers that had product portfolios with more smaller-sized displays will need to quickly react quickly, clear inventories and offer larger-sized products. In January, the price of 7-inch panels declined by 13% on average, while the price of 8-inch panels fell by more than 22%.” Price declines will be more restrained in February and in the second quarter of 2009 due to better supply checks and balances from suppliers that are managing their production and capacity utilization. For the time being, all plans relating to new fabs for small/medium panel production from Wintek, Samsung and GiantPlus have been shelved. Moreover, Taiwanese suppliers implemented further utilization cuts in the first quarter of 2009 to counter weak and slowing end-market demand.
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