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LCD Panel Makers Could Get A Break

Money-losing LCD panel makers might get some relief soon, as panel prices could recover next quarter following production cuts by South Korean makers, IHS Markit said.

Almost all panel makers have drifted into quarters-long losses due to an overcapacity-driven slump since the second half of last year.

Taiwanese makers AU Optronics Corp and Innolux Corp lost NT$10.38 billion (US$343.79 million) and NT$10.58 billion respectively in the first nine months of this year, their financial reports showed.

To prevent their financial situation from further deteriorating, panel suppliers were negotiating for price hikes of 1 to 3 percent this month for 32-inch to 65-inch TV panels, the market researcher said in a report last week, adding that it would be the first price increase in more than six months.

The price hikes could push through, as several top-tier TV brands and contract TV manufacturers indicated that supply is tightening and prices could increase in the coming months, the report said.

After panel prices touched new lows in October, then stabilized in November, several panel makers indicated that from this month, they would start increasing prices for panels that had been cut too low in the past few months, despite it being a slow season for TV panels, the report said.

The proposed price hikes were to be mild at about US$1 to US$3 per unit, or one to 3 percent, this month, the researcher said.

Panel makers aim to increase prices to at least higher than their cost levels by the first quarter of next year, it added.

The price hikes could be a short-term phenomenon that takes place in the first and second quarters, it said.

“Thus, the price rebound may be brief,” it said.

If South Korean panel makers continued restructuring inefficient panel capacity next year, demand and supply for large-sized displays should reach a parity, it said.

Yuanta Securities Investment Consulting Co said in a note that its channel checks suggest that prices for most TV panel sizes would increase next month.

“This is because of a better supply-demand situation,” Yuanta said on Friday.

The investment consultant attributed the improvement to a healthy supply chain inventory and production cuts from LG Display Co and Samsung Electronics Co, which have decided to convert their LCD capacity to higher-value OLED panels.

AUO and Innolux have also lowered factory utilization this quarter to deal with an oversupply, Yuanta said.

However, Yuanta warned of a potential price decline in a wide range of PC panels next year after Chinese panel makers allocate more capacity for profitable PC panels.

That might pose a risk to Taiwanese panel makers, as PC panels make up a substantial portion of AUO’s and Innolux’s total revenue, it said.

IHS Markit forecast a severe supply glut in the gaming monitor panel segment next year, as supply would be double that of demand to 20 million units next year. Taipei Times

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