March 17, 2010

Rumors circulate around the Toshiba Mobile Display (TMD) division

Converge LCD Update.

A strong market and an upcoming game of musical chairs.
Despite an improvement of 17% over the same period last year, the sales figures on LCD TVs during Chinese New Year failed to impress panel makers. Most manufacturers had hoped to see improvement in the neighborhood of 30% prior to the holiday. The factory pricing on LCD TVs remains largely unchanged for the month of March as a result. The sixth-generation line, which is responsible for building 26-inch through 37-inch TV panels, is still keeping busy, with full production capacities scheduled through most of the second quarter. The 7.5-generation line, which builds 40-inch and larger TV panels, reveals the realities of a different market segment. Current factory lead time for 40-inch or larger panels is around 4 weeks, down from the 6-8 weeks in previous months. This is indicative of weakening demand due to seasonal factors. A price correction is now starting to appear imminent for TV panels of 40 inches and larger.

Desktop panels are experiencing price increases of 4%-6% in March due to sustained shortages, in particular on mainstream sizes of 18 inches through 22 inches. Personal computer makers are also getting ready for a healthy back-to-school buying spree. Strong demand and material shortages continue to push the desktop panel pricing higher with minimum 4-to-6-week lead time. The situation is similar for notebook panels, with factory pricing expected to keep creeping up in the second quarter. Two of the more allocated sizes are 15.6 and 17.3 inches. For the month of March, there is a $1-$2 increase on most mainstream sizes. Unless the market changes due to unexpected factors, notebook panels will likely see a modest shortage through this summer.

The industrial panel market would have seemed uneventful had it not been stirred by the recent speculation that Toshiba will be selling its TMD (Toshiba Mobile Display) division due to repeated, hefty losses over the years. According to market insiders, Toshiba is currently evaluating its TFT product offerings and planning to retire panels of certain form factors within the next 2 quarters, which include 5.7, 6.5, and potentially 12.1 inches. Toshiba is planning to bump the 12.1-inch pricing from the current level of $120 to $150-plus as the panels transition to end of life. One or more of the production plants in Japan is scheduled to shut down in July as a result. Eventually, Toshiba will exit the TFT industry altogether. A number of panel makers from Japan and Korea are reportedly in talks with Toshiba to take over the TFT business. Converge will continue to monitor its progress and its market impact in the near future.

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