Prices for monitor panels face the opportunity for rebound in March
According to the latest observations in market development trend for March by WitsView, a research division of TrendForce, the decrease of working days in February and issues of labor and material shortages resulted ineffective panel module shipping. Unable to meet the needs with customer orders, part of deliveries were forcedly postponed to March. On the other hand, the production base of CMI’s set assembly production lines located in China is recently undergoing a large-scale factory transfer project. With this change, brand customers must undergo recertification with the new factory and related product standards. This has seriously affected CMI’s set OEM business, where clients are forced to partially change orders toward other OEM makers with CMI’s insufficient supply, which leaves the market with a brief gap. With this bottleneck supply both for modules and sets, panel makers used this opportunity to raise panel prices. However, inventory preparations by downstream clients appeared with declines after the Chinese New Year due to the flat performance of LCD TV cloud terminal. According to our investigation in procurement amount with China’s top 6 major TV makers, the orders for panel procurement in January continued to decline, resulting with a 2M decrease from last December to January, declining nearly 40%. While makers mainly focused on digesting inventory, the pressure for price falls in LCD TV panels still remains.
As for the supply side, however, raising sales plans in March by downstream clients shall once again restore utilization rate to high standard operations. In addition, with the continuing opening of new capacities, such as the BOE G6, LGD 3rd G8.5, Samsung LCD 2nd G8.5, CEC Panda G6, AUO’s L8B and CMI’s G8.5 2nd stage at Southern Taiwan Science Park. However, the restraining of module assembly capacity during February to March caused the rising of inventory levels with semi-finished products for panel makers. This shall still give pressure to panel price trends after April. (See figure 1)
TV Panel Price Update
The demands by brand customers for models of spring 2011 were unable to meet 100%, starting from the end of last year, due to issues of labor and module material shortages by panel makers. Furthermore, the decrease of working days in February forcedly postponed a part of orders till March. However, the delay for new model demands had limiting help towards the overall demands for TV panels. The reason was caused by the large inventory preparations just before the New Year from
Monitor Panel Price Update
According to WitsView’s analyses with the shipping data of downstream monitor OEM and brand customers, sales plans in March significantly grew nearly 30% than February. The main reason was caused by the shortages of labor and material, and the decrease of working days in February, and therefore part of production plans were forced to be delayed. In addition, the recent adjustment with the production base of CMI’s set assembly lines located in China caused disorder to the original clients’ sales plans, and forced to seek other OEMs for emergency needs. In addition, the limited module capacity of panel makers all of a sudden directed the market to a tight supply. However, the current downstream inventory level is still within a controllable range. On the other hand, the prices for monitor panel prices have been set at the cash cost level for a long time. Therefore this strong rising demand provided panel makers a rare opportunity for a slight increase of USD 0.5~1. But at the same time, observations show while panel makers conduct slight capacity adjustments in February, the utilization rate in March is once again raised. However, flat sales cause panel makers’ inventory of cell to rise once again as supply increases, which will leave uncertainties for the following Q2. (See figure 3)
Notebook Panel Price Update
According to the investigation by WitsView with the shipping data of downstream set makers, the decrease of working days in February, also the flaw chipset design effect of Intel Sandy Bridge, MoM declined 6.6% and shipping of orders by downstream clients was postponed till March. As a result, production plans in March significantly grew nearly 20% than February. Although the netbook market was impacted by tablet PCs, MoM growth in March was also nearly 20%. However, market sales for notebooks remained swaying at the bottom. Although there was temporary support from the demand side, the trend reflected from panel prices showed of maintaining only balance.(See figure 4)
Conclusion
The price changes in March are particularly complex and elusive. The insufficiency of panel module supplies and adjustment in CMI’s set assembly lines disrupted the original sales plans of downstream clients. In order to fill the gap, manufactures such as TPV and Qisda, which mainly operate monitor OEM business, were benefited. As demands are having a comeback, the utilization rate of panel production lines has also increased. Furthermore, the opening of new capacities will continually increase the supply side. The worries, however, are with the flat performance in the cloud terminal. As the price of international crude oil remains at a high level, the increasing concerns of inflation are once again raised and unfavorable to sales terminal performance.
