Price Overview, 1H of Sep, 2009

by WitsView on Sep.09 2009

With gradual shift in market supply and demand, panel price trends in 1HSep reached another turning point – after seven consecutive months of price increase, downstream customers have indeed felt the pressure from rising set cost; this pressure has also taken its toll on second and third-tier brand customers and SIs. On the other hand, panel inventory level has been rising since the second quarter – in the first half of the year, China’s electronic subsidy program has spurred substantial growth in panel shipment, benefiting Taiwan panel makers in particular; however, after the wave of China’s strong domestic demand in May, the period from June to September is a slow season for TV sales, therefore panel demand should be more resilient than expected. However, in June/July, the shortage of TFT-LCD glass substrate prompted panel makers to initiate a price hike, which forced downstream customers to continue their purchase of panels during the low season; even though September/October are typically the peak months for panel shipment as vendors prepare for year-end sales, amid rising inventory level and increasing set cost, such price pressure will ultimately fall back onto panel makers. Moreover, global panel capacity has increased due to continued operation of new fabs, therefore, if demand weakens, price war among panel makers is inevitable. (See figure 1)

Monitor Panel Price Update

As previously mentioned, rising inventory level in August signaled that monitor panels may face price drop in September, among them, the widescreen segment endured the most pressure, particularly the 16:9 products, which may see a $1~4 decline; whereas 16:10 products remained relatively flat; on the contrary, strong price performance is seen among the commercial models, such as 17- and 19-inch – this can be credited to the recovery of global economy, demand for enterprise upgrades will likely emerge in September/October; in addition, after the proliferation of widescreen products, supply shrunk rapidly; as a result, these models are forecast to rise by $1~2. (See figure 2)

TV Panel Price Update

In 1HSep, TV panel prices remained fairly flat, even though supply is limited and some customers still face a supply gap in 37W and 42W. However, panel price hike in June/July has led to mounting set cost pressure among downstream customers, furthermore, China’s retailer and TV manufacturers’ set inventory and panel inventory are already fairly high, therefore the market is counting on the sales performance during the National Day Holiday in October to clear away the inventory. However, impacted by weak monitor panel demand, prices of small-sized TV panels may be quite volatile; as a result, within the extent that allows for profitability, panel makers will maintain stable prices in hopes of securing orders from downstream customers. (See figure 3)

Notebook Panel Price Update

Large-sized panels may witness strong demand in September – this can be credited to the shipment of NB models that adopt the Windows 7 operating system, which are slated to unveil at the end of the year; as a result, price trends of these large-sized NB panels will be better-bolstered compared to prices of monitors and TVs, and it is estimated that a rise of $1~3 may occur. Of particular note, in the netbook market, amid ample panel supply and the introduction of the11.6W~12.1W products, concerns of product oversupply may be reflected early and their prices may shake as a result. (See figure 4)

Conclusion

September panel prices have undergone turbulence – in the first half of the year, panel shipment surged thanks to inventory replenishment of downstream customers and China’s electronic subsidy programs; however, downstream customers have built up a sufficient inventory level, and after struggling through short supply in the market, the equilibrium of supply and demand has now been restored, therefore, despite reduced glass supply between August and October due to the fire breakout at Corning’s furnace in Japan, as the market reaches a turning point, glass shortage adequately offsets the impact of panel oversupply, limiting the influence on the overall industry. In addition, as downstream customers have been experiencing mounting pressure of high set cost, it is bound to affect demand for panels. Going forward, the key factor which influences the panel price trends in Q4 is the end market sales performance during China’s National Day holiday and Christmas holiday, which will effectively clear away the high inventory build-up.

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