After years of stagnating under the weight of overproduction, the price of liquid crystal display (LCD) panels used in computer screens is finally taking off. Yesterday, the top four makers of LCD panels said rising demand finally caught up with supply, and a sales boom is sending prices upward.
For the month of November, Taiwan's top four LCD panel makers say they sold nearly 1.53 million panels, 14.5 percent more than last month. In addition, the average price of industry standard 15-inch panels brought prices of between US$215 to US$230 per screen, far higher than in August, when prices hit record lows of US$200 per panel.
"The demand is unexpected ... The more people who buy an LCD monitor, the more demand comes up. When you see people around you with an LCD monitor, it makes you want one," said Charles Yang (楊孝元), an electronics analyst at Entrust Securities Co (永昌證券) in Taipei.
Falling LCD prices hit the market at a time when people want to upgrade from the older, box-shaped CRT monitors that hog office desk space. Replacing them with thin screen LCD screens is becoming so popular that retailers are bundling new computers with LCDs instead of CRT monitors "because that makes it easier for them to sell the product," said Yang.
The four companies set to benefit the most from the rise in LCD panel prices are AU Optronics Corp (友達光電), Chi Mei Electronics Corp (奇美電子), Chunghwa Picture Tubes Ltd (中華映管) and Hannstar Inc (瀚宇彩晶). The largest of the four firms, AU Optronics, is the offspring of a merger between Acer Display Technology Inc and Unipac Optoelectronics Corp (聯友光電) in March of this year.
At that time, overproduction in the industry coupled with the tech slump, threatened to push many local screen makers out of business. The selling price per screen had dropped below the cost of production throughout the industry.
Analysts say the move has proven to be very wise, with AU Optronics reaping the benefits of becoming the world's third largest maker of TFT-LCD panels. Size means the firm can cut the best deals with component makers, for volume shipments of their goods. The new firm was also able to consolidate production lines and put off building any new plants.
South Korea's Samsung Electronics and LG Philips are the No. 1 and No. 2 LCD panel makers, respectively, in the world.
To be sure, analysts said the rebound could soon lose steam. If LCD panel makers begin to add new production lines too fast, the rebound will falter. In a region of the world where overproduction is cronic in many sectors, LCD makers have been particularly notorious for flooding the market and driving down prices.
"In September, big LCD makers raised prices by around 5 percent month-on-month and we expect that to continue through December ... In January, prices will drop slightly because January is a weak season," said James Huang, an analyst at National Securities Corp (
Other industries in Taiwan will also benefit from the rise in LCD orders. Chip designer Novatek Microelectronics, which makes the driver chips found in LCD monitors, said yesterday it raked in sales of NT$438 million in November, its highest this year. The firm expects December sales to remain above NT$400 million.
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