Panel Cost & Breakdown Analysis_1Q12

Based on the review of Q3 in 2011, the inventory issue has become a troubling issue for panel makers due to weak overall demand, therefore they have begun to greatly reduce production line utilization rate since Q3, and the panel price has been continuously collapsing. Entering Q4, rush orders and certain restocking demands have begun to re-appear with inventory adjustment coming to an end and with sales performance during National Day Holidays in China meeting the expectation. Therefore the prices of panels of three major applications have been gradually stabilized after closing in on the level of cash cost with no much room for further price decline. As for the components and parts, even though there has not been any significant improvement on overall demand, this wave of demand based on rush orders and short-term orders can still help components makers maintain shipment stability.