April 14, 2010

Demand remains healthy

Converge LCD Update.

Despite sustained material shortages, the LCD market is catching its breath in April after a rally in recent quarters. While the overall lead time on TV panels remains between 4 and 8 weeks, 40" and larger sizes are actually delivering closer to 4 weeks than to 8 weeks. Factory pricing for these sizes has also only dropped by single-digit amounts. Pricing remains unchanged from the previous month for panels between 26" and 37", with lead times closer to 8 weeks than to 4 weeks. One factor for the pricing correction is seasonal, as demand declines from the peak of the holiday seasons around the globe. Panel makers are approaching the market situations with cautious confidence as the overall demand for TV panels is expected to remain healthy after this temporary correction.

Desktop panels are holding ground with factory pricing remaining largely unchanged and supplies tight for sizes between 21" and 24". Pricing fluctuates slightly on these sizes, in the $2 to $3 range, depending on the models. Average lead time is also unchanged in the 4- to 6-week range. Demand persists for certain 17" through 19" models, particularly those with 4:3 aspect ratios. Market pricing also remains high, at the low $100 range for these models.

Shortage is modest for notebook panels. Selected sizes with new LED technology, such as 10.1", 15.6" and 17.3" panels, are in higher demand. Pricing fluctuation is largely fueled by the weaker dollar in recent weeks. With CCFL backlights being obsolete, the demand for inverters also dropped. Not surprisingly, certain models featuring CCFL backlights with attached inverters are showing clear signs of shortage. Pricing will likely continue to rise in the foreseeable future as these panels become scarce.

Recent market activities seem to confirm Toshiba’s decision to exit the TFT business (see Converge’s March Market Insights). AU Optronics announced on March 31 the acquisition of AFPD, Toshiba’s subsidiary in Singapore. AFPD is one of the largest manufacturers of low-temperature polysilicon, or LTPS, TFT LCDs. LTPS is the base for the new active-matrix organic light-emitting diode, also known as AMOLED, technology. The AMOLED display technology is expected to replace conventional TFT in future mobile phones. This $110 million acquisition will allow AUO to better position itself to compete with Chimei Innolux Corporation in the mobile display market. This move is also interpreted by market observers as part of AUO’s strategy to regain its leadership position in the TFT manufacturing industry. This acquisition is scheduled to be official in July. Converge will continue to monitor the market impact of this marriage as well as Toshiba’s future plan for its TFT business.

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