The level of inventory at LCD panel makers returned to a healthy level at the end of December, eliminating concerns of excess inventories in the previous two months, according to DisplaySearch’s MarketWise-LCD Industry Dynamics report.
Panel makers expect large-area panel shipments to trend down in January with a two percent decline month-to-month (M/M), said DisplaySearch. TV panel shipments will fall the most at nine percent M/M, while notebook and slate PC panel shipments will increase by more than five percent M/M.
Similarly, the report finds that the top five notebook PC OEMs will decrease production in January by two percent M/M, to 13.7 million units. They also plan to reduce production to 11.2 million units in February before production rebounds to 15 million in March 2011, said DisplaySearch.
The report finds, on average, TFT LCD inventories, defined as finished modules held by panel makers, are down to seven to eight days for TV panels, six to seven days for monitor panels and five to seven days for notebook PC panels, which are all manageable levels for panel makers, said DisplaySearch. The report also indicates that panel prices, especially LCD TV panels, are stabilizing because there is little inventory pressure pushing panel prices down.
However, IHS iSuppli says the large-sized panel market in 2011 still faces the possibility of oversupply, which could result in falling prices. Manufacturing capacity may significantly exceed market demand in the first half of 2011, although capacity expansion in the second half of 2011 may decrease to a lower level than demand, according to the market research firm.
“If panel suppliers can control production skillfully and rationally, 2011 can be very positive year for the LCD industry,” said Sweta Dash, senior director of LCD research at IHS, in a statement. “On the other hand, excessive production in the first half may lead to an inventory buildup and oversupply in 2011.”
DisplaySearch reports that while panel makers have safe inventory levels, there are still concerns about high inventory for brands. The report indicates that TV, monitor and notebook PC brands are holding medium (four to five weeks) to high (more than six weeks) supply chain inventories. This explains the brands’ restrained production plans in the first quarter of 2011, said DisplaySearch.
Most brands are still facing high inventories for LED-backlit LCD TV models, said DisplaySearch. In the first quarter of 2011, brands are expected to focus on promotion of LED-backlit LCD TVs before new models come on line in March.
IHS iSuppli expects more than two-thirds of large-sized LCD panels shipped worldwide in 2011 will incorporate LED backlights, up from less than one half in 2010. The market research firm forecasts shipments of large-sized LCD panels with LED backlighting will reach 495.6 million units in 2011, up 74.9 percent from 283.3 million units in 2010.
“With the strong production in Q4 2010, we estimate Chinese TV brands were still carrying extra set inventories at the end of 2010, and some of that is for the upcoming Chinese New Year. In Europe, sales have TV brands worried, so the brands’ inventory will still be a concern in Q1 2011,” said Deborah Yang, research director at DisplaySearch, in a statement.
DisplaySearch forecasts LCD TV panel shipments to China will fall from 15 million units in the fourth quarter of 2010 to 13 million units in the first quarter of 2011. Chimei Innolux is expected to lose market share while LG Display and Sharp will gain share over this time period.