December 16, 2009

Desktop panel supplies tighten

Converge LCD Update.

One of the biggest news items in the panel industry is the recent merger of CMO and Innolux. Innolux is part of the Foxconn Group, which is known in the electronics industry for its rapid growth and aggressive pricing strategies. The merger allows Foxconn to better integrate its supply chain, thus being better positioned to compete with industry leaders from mobile phones to notebooks and LCD TVs. Converge believes there is little doubt that Foxconn will surge ahead as a leader in the manufacturing of these applications in the coming years.

Despite the overall downtrend, TV panel pricing is showing signs of stability in December, and the pricing outlook for January 2010 is expected to remain largely unchanged. The strong seasonal demand from Asia before the Chinese New Year provides support at the current pricing level. Factory pricing for 32", a benchmark regarded by many market observers, remains around $200, with lead times stretching out to 4 to 6 weeks. Most factories are fully booked through the end of January. TV and desktop panels are both manufactured in the sixth-generation line. With more production capacities being allocated to TV, desktop panel supplies will inevitably be affected and are starting to show signs of shortage.

Downsized production capacities and strong seasonal demands in China conspired to push the prices higher for monitor panels. In addition to making 26", 32", and 37" TV panels, the sixth-generation line also supplies mother glass for mainstream desktop panels. Pricing for desktop monitor panels is expected to increase 5% to 10% between now and January 2010. Several sizes in the highest demand are 18.5" through 22.0". The factory lead time has also increased from 2 to 3 weeks quoted in September through October to 4 to 6 weeks at the current level. With the holiday seasons approaching around the globe, panel supplies are getting tighter.

LCD supplies for notebook PCs remain modestly allocated. Going into 2010, most of the 15.4" and 17" models featuring CCFL illuminators are completely discontinued, replaced by LED technologies. This is one of the technological advancements that revolutionize the entire industry. On the flip side, this may represent one of the toughest challenges that the service industries have had to face in a decade, in fulfilling their repair contracts as the shortages on the CCFL technology become permanent.

The industrial panel market shows little change, with demand resurfacing on certain EOL models such as the Sharp LQ084, LQ104, and LQ121 series.

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