Decreasing demand and oversupply may soon be about to hit leading flat-panel-display makers in Taiwan, analysts said yesterday.
AU Optronics Corp (
"The market consensus is that everyone is facing losses in Q4 this year, as panel prices are going down faster than expected," said Debbie Wu (
This is in spite of an increase in shipments. The top-five companies in Taiwan shipped a total 1.88 million TFT-LCD panels in September, up 1 percent over the previous month. Thin-film transistor liquid-crystal display (TFT-LCD) panels are used to make the slim monitors for notebook computers and flat-screen TVs.
Wu forecasts an increase in shipments of between 7 percent and 10 percent this month, but a slowdown of between five to seven percent for the fourth quarter. As there is an oversupply of products on the market, prices are dropping rapidly, she said.
Continuous oversupply
Market watcher DisplaySearch said in a report that an oversupply ratio of flat-panel displays that began in the third quarter at 10.4 percent, will remain about the same in the fourth. This means the average selling price of each panel will fall by between 10 percent and 12 percent, the report said.
"Given that revenues in the first three quarters were only 57 percent to 66 percent of individual company projections, all five major manufacturers are facing pressure to lower their financial forecasts for this year. They are likely to face huge earnings declines for the second half and report growing losses next year, primarily because of falling average selling prices," Wu said.
Chunghwa Picture Tubes slashed its sales forecasts for the year last week in the face of a drop in demand and falling prices. The company now expects to bring in 20 percent less sales revenue than it had previously forecast, down to NT$40 billion.
Hannstar's Q3 sales reached almost NT$6.8 billion in the third quarter, up 64 percent over last year. But the company's forecast in June for total annual sales of NT$41 billion will soon be revised downwards, a source at the company said yesterday.
"The pace of price erosion is faster than expected," said James Wang (
"At this moment, demand is relatively soft. Next year, more capacity will come on line and unless there is new demand, the resulting oversupply will push prices down even further."
Increasing production, falling prices
Wang added that all five companies are expected to ramp up their production of fifth-generation TFT-LCD panels next year.
Wang said that a 15-inch TFT-LCD panel fetched US$260 at its peak in the second quarter, but now the same panel sells for as little as US$205.
Martha Chen (
"The prospects are not good," she said. "The down cycle is just starting."
South Korean rivals LG and Samsung are the only companies that have started fifth-generation production, Chen said.
Quanta Display and AU Optronics are expected to start fifth-generation production in the second half, and prices are likely to fall again, she said.
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