LCD panel suppliers slow production, control inventories for small/medium displays

El Segundo, Calif. — Suppliers of small and medium LCD panels don’t expect continued growth to last into the fourth quarter, after strong sales during the previous six months, reports iSuppli Corp. The market researcher says this has pushed suppliers to slow production and restrain their inventories.

Small/medium LCD panel suppliers have experienced high growth and rising average selling prices (ASPs) over the past couple of quarters. Unit shipments from the top Taiwanese suppliers, which account for a significant portion of the small/medium display business, rose by 53.1 percent in the second quarter of 2009 compared to the first quarter, said iSuppli. In addition, during the first two months of the third quarter of 2009, these panel suppliers achieved 93 percent of the shipments they made for the entire third quarter of 2008, said the market research firm.

iSuppli reports that worldwide ASPs for small/medium displays rose to $11.40 at the end of the third quarter in September, up 1.3 percent from $11.20 at the end of the second quarter in June. Click here for more pricing information.


However, growth is decelerating in the fourth quarter, with iSuppli’s August forecast calling for a slight 0.2 percent rise in global revenue. “Suppliers are preparing for what they believe will be a deceleration in demand in the fourth quarter, traditionally a slower period because of the end of the holiday buying rush,” said Vinita Jakhanwal, principal analyst for small and medium displays at iSuppli.

“Demand in the third quarter was boosted as tier-1 OEMs pulled in orders for the holiday season. This means that some orders that might have been placed in the fourth quarter occurred in the third quarter instead. Demand also was fueled by the arrival of the Chinese Golden Week. Given these factors, combined with ongoing economic concerns, panel suppliers in the fourth quarter are reducing capacity and keeping a tight reign on inventories in order to stabilize prices,” Jakhanwal stated.

In the small- to medium-sized display sector, panel shipments rose for most suppliers in August, but declined for three of the seven Taiwanese suppliers that iSuppli tracks on a monthly basis, said Jakhanwal. However, the drop suffered by these three suppliers was not due to any inherent weakness on their part, but instead was due to the large numbers reported in July, which made August appear weak in comparison, according to iSuppli.

Overall, August shipments were strong compared to the earlier months, boosted by strong demand for non-mobile medium-sized panels, which are used in low-cost netbook PCs, portable DVD players and digital photo frames (DPFs).

The strong results experienced by the Taiwanese did not apply to Japanese LCD suppliers, which are being impacted by the slowdown in demand for mobile phone displays, according to iSuppli. Financial restructuring, the closing of old fabs and reliance on Tier-1 OEMs will lead to about a 9 percent decline in shipments from Japan in 2009, said iSuppli.