December 19, 2005 – Dell Computer Corp. has cut orders for 600,000 thin film transistor-liquid crystal display (TFT-LCD) monitor panels in the past two months, with suppliers in both Taiwan and South Korea are expected to suffer the impact, according to industry sources, reports the Taiwan Economic News.
The effects on the panel industry are expected to continue to the 1Q06or even longer. Currently, Dell accounts for about 20% of the global LCD monitor market
According to a senior official of a major panel maker in Taiwan, Dell has cut orders for about 200,000 panels with South Korean suppliers Samsung Electronics and LG Philips LCD Co. Ltd., or LPL, and for about 400,000 units with Taiwan companies AU Optronics Corp. (AUO), Chi Mei Optoelectronics Corp. (CMO), Chunghwa Picture Tubes Ltd. (CPT), and Quanta Display Inc. The official added that HannStar Display Corp. suffered relatively minor impacts from Dell’s cuts, as the company’s shipments to the computer giant are very low
Hsiung Huei, AUO VP, refused to comment on customer orders but said that inventory adjustment during low seasons is a normal condition and that the industry should not be too nervous. An industry insider reported that Dell began cutting about 20% to 30% of its panel-order volume in November, a traditional off month for office automation (OA) products
Some industry insiders pointed out that Dell currently has an LCD monitor inventory of approximately 1.6 million units, or about a six-week supply. However, Lai Han-wen, an analyst at the local Topology Research Institute (TRi), deemed that the six-week inventory is an acceptable high level, compared with the normal three- to four-week volume
According to the monitor makers, the price drop for OA computer hardware products is expected to continue in the first half of 2006
Some local institutional investors said that the fall in prices for OA computer products in November was steeper than originally expected, including a 3% to 5% price drop for monitor panels. They also deemed that the trend might reduce quotes from some second-tier panel suppliers under their cash costs.