February 13, 2012 — After 5 straight months of steep declines, prices for large-sized liquid crystal display (LCD) panels stabilized in December 2011, thanks to better-than expected sales and decreased production, according to an IHS iSuppli LCD PriceTrak report.
Global pricing for average large-sized LCD panels decreased by just 0.1% in December. This slight reduction indicates market pricing is steadying out compared to the 0.5% drop incurred in November and the runaway 3 or 4% contractions regularly seen during most of H2 2011.
The last time that panel pricing came close to December’s minimal level of decrease occurred during a two-month span during May and June 2011, when pricing retreated by 0.2% per month.
|Figure. Large-size LCD panel prices.|
December’s panel price also showed the smallest month-to-month change in all of the prior 12 months, as shown in the figure.
The overall pricing for large-sized LCD panels reflects the average taken among the three major markets for the panels, i.e., for televisions, monitors and notebooks. Large-sized panels are defined as those having a diagonal dimension of 10.4 to 55" and above.
“The firming in panel prices in December can be attributed to lean inventories throughout the supply chain and to lower factory utilization rates, after suppliers were forced to cut production in order to control supply and stem financial losses,” said Sweta Dash, senior director for LCDs at IHS. “Sales also picked up in the United States and China, helping to further boost the market. Despite this, there will be little opportunity for suppliers to increase pricing even after the market has evened out, due to continuing uncertainties in the global economy. Chinese demand also is expected to decline after the Lunar New Year sales season in January, preventing prices from increasing.”
Large-sized LCD fab capacity utilization was running at 78% in December compared to 86% a year earlier. This reduced available supply, slowing the rate of price declines during the month.
Among the individual large-sized LCD applications, prices for television panels fell 0.2% in December compared to a 0.6% contraction in November. TV panel prices, however, are expected to remain flat in the first quarter of 2012.
Global television inventories in the worldwide retail channel reached a four-to five-week low in January after robust sales during the holidays in the United States and the Lunar New Year holiday in China. This development may cause some brands to build up inventory for future months as well as to stockpile supply for new model introductions. In particular, many new TV sizes — such as 39" and 50" panels — are expected to be introduced. Brands also are exploring 60-inch-and-larger sizes for the niche market, after the sizes proved successful during holiday sales.
Overall, TV panel inventories have declined to less than 25 days, compared to their usual 30-day average. Moving forward, LCD TV panel production will be lower in the first quarter because of the Lunar New Year holidays observed in the Asian manufacturing zones where the panels are made, as well as the shorter month in February.
In comparison to the TV space, panel pricing was down 0.1% in December for the monitor and notebook segments, which individually had fallen 0.2% the month before.
For the desktop PC monitor area, corporate demand remains weak because of prevailing economic caution in the business and enterprise world. Meanwhile, mobile products like tablets, ereaders and notebooks grabbed more sales among consumers than monitors did during the recent Christmas holiday sales. Overall growth in 2012 remains uncertain for the area.
In the notebook PC segment, the October flooding in Thailand is likely to impact production into early 2012, affecting panels being purchased for notebooks in the process. As a result, brands will continue to adjust inventory and pricing in channels, given the shaky outlook here for some time to come.
Increasingly, capacity for notebook and monitor panel production is being shared with that for TV.
Also, more large-sized LCD capacity is being shifted toward tablet applications due to the success of devices like Apple Inc.’s iPad, leading to adjustments in production throughout the chain.
Access the report, Large-LCD Panel Price Stabilized in December After Five Months of Decline, at http://www.isuppli.com/Display-Materials-and-Systems/Pages/Large-LCD-Panel-Price-Stabilized-in-December-After-Five-Months-of-Decline.aspx?PRX