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Electronics Production | November 29, 2010

Demand recovery slower than inventory replenishment

According to the latest surveys by WitsView, shipments from the global top ten brand vendors added by 1.2% MoM to 12.42M units in October 2010, and shipments from the global top ten SIs continued the momentum of September, and rose by 1.5% MoM to 14.06M units.
With LCD monitor panel prices hitting the bottom, brand vendors’ loss risk from panel price decline went away. In October, brand vendors were aggressive in strategically restocking for the 4Q10 demand in Europe and the US. Among which, the retail channels in Europe were of the most aggressive ones – they started their inventory replenishment for 4Q10 demand; additionally, the continued appreciation of the euro resulted in the relatively lower procurement cost among the vendors in the region, which further strengthened the Europe retail channels’ momentum in product pull-in.

WitsView pointed out that even though LCD monitor panel prices showed a slow uptrend, and the overall economy gradually detached itself from the Europe debt crisis. However, although the market expected the robust demand, the end-market demand did not revive as fast as the brand vendors’ inventory replenishment, so the inventory problem constantly emerged in hot season. Hence, downstream LCD monitor vendors appeared to be lack of confidence toward the uptrend of monitor panel prices and the market development. As a result, WitsView conservatively estimated that brand shipments may fall by 2~6% MoM in November and December. For the market trend of 4Q10 and 1Q11, the end-market sales performance in the US and Europe, and the severity level of the labor and material shortage problem around the Chinese New Year holiday will become the indicators in the future development of IT market.

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