LCD Shipments Finally Back on Track?

Shipments of large-sized Thin Film Transistor-Liquid Crystal Display (TFT-LCD) panels reached 47.1 million units in June, up 9 percent from the previous month and up 26.2 percent from the same time a year ago, according to iSuppli Corp.

June marked the first time this year that all three panel applications, i.e., televisions, notebooks and desktop PC monitors, showed year-over-year expansions in shipments

This growth was led mainly by television and notebook panels with increases of 9.2 percent and 9.1 percent, respectively. This was followed by monitor panels, with an increase of 8.3 percent.

As preparation gets under way for the hot sales season—i.e., back-to-school and Christmas—shipments in July, like in June, also are are positive, based on early indications. Nevertheless, there is fear that panel supply may be tight because of various factors, including the continuing glass shortage, as well as the recent earthquake in Japan that has damaged Corning’s glass tanks and impacted glass supply for Sharp’s eighth-generation fab.

Panel Shipments
For the entire second quarter of 2009, global large-sized LCD panel shipments were 43 percent higher than the first quarter and up 12 percent from the second quarter of 2008. Factors contributing to the strong quarter include the improvement in the global economy, strong demand from Chinese market, new model introductions, the shift to 16:9 panels and the increasing use of Light Emitting Diode (LED) backlights.

The strong growth in demand, combined with tight supply, resulted in 20 percent to 25 percent panel price increases for mainstream large LCD panels from March to June. The rise in pricing helped panel suppliers move away from below-cost pricing and losses and toward profitability for all applications by the end of the second quarter. Panel demand remained strong in July. Buyers, expecting significant price increases to occur in July, were willing to buy extra panels in quantity. Preparation for the hot Christmas season and fear of further panel supply tightness due to glass shortages will keep panel demand positive in August. Panel demand is expected to be strong in the third quarter of 2009.

Monitor Panels
Shipments of monitor panels in June reached 17.8 million units, representing a better-than-expected growth of 8.3 percent from May and an 8.5 percent rise from June 2008. The pricing increases in July and August are pushing panel buyers to take in more inventory.

However, shipments of monitor panels for these months are expected to increase moderately, due to capacity constraints caused by glass shortages. Furthermore, there are some early signs that panel inventories among buyers are starting to increase.

TV Panels
Unit shipments of TV panels reached 13.2 million in June, rising sharply by 61.8 percent from a year earlier and up by 9.2 percent from the month before. The demand for inventory restocking among Chinese and U.S. brands continued in June, and shipments of television panels are expected to continue growing in July. But starting in August there have been some signs that Chinese television brands are starting to slow down their panel purchasing due to high prices and increases in inventories.

Notebook Panels
Shipments of notebook panels, including 10-inch displays, reached 15.3 million units in June, driven by the strong demand for CULV models. Shipment rates were up by 9.1 percent from the previous month and up 26.8 percent from the same time a year ago. Growth is expected again in July as panel buyers prepare for the launch of new models.

Panel Inventory Remains Healthy but is Trending Up
Inventory levels among panel suppliers remain low because of shortages in glass and certain components, but the panel inventory level at buyers is up by one to two weeks. And while the majority of brand buyers are reporting sufficient panel inventories for current usage, buyers still are purchasing panels for year-end sales. Overall, an increase of one to two weeks is considered healthy. After several months of price hikes, branded vendors are facing severe profitability issues. Moreover, panel buyers are cautious regarding building up panel inventory and are resisting sharp price increases.