Global flat-display panel makers could suffer the most severe supply glut since 2002 in the first quarter of next year as a spate of advanced plants come online this year, a local research institute said yesterday.
In the traditional peak season of fourth quarter, supplies of large-sized panels for computers and TVs are expected to exceed market demand by 11 percent, as most major liquid crystal display (LCD) suppliers ramped up fifth-generation (5G) plants in the third quarter, according to the latest report by the government-funded Industrial Technology Research Institute.
5G factories can produce twice as many panels as the less-advanced fourth-generation fabs.
"The surfeit will deteriorate further in the next [first] quarter as supplies increase while demand dwindles in the slow season for computers and electronics products," said Liang Su-chen (梁素真), an institute analyst.
The glut will expand further to around 20 percent in the first three months of next year, when demand will fall due to seasonal factors, even though some LCD panel makers have decided to halt the construction of next-generation fabs, she said.
In the first quarter of next year, supplies of large-sized flat panels will rise to around 2.25 million square meters, versus demand for less than 2 million square meters, according to Liang's calculations.
New equipment spending this year by LCD panel makers around the world surged by 43 percent, the fastest increase ever seen, to US$9.42 billion from US$6.59 billion last year, according to a DisplaySearch estimate from January.
Most investments had targeted demand for flat-screen televisions, which was expected to be fueled by big sporting events such as the Olympic Games in Athens, but these hopes didn't come to fruition, Liang said.
"An enthusiasm for sports did not prompt people to lay out cash for those pricey flat-screen TVs," Liang said.
The lower-than-expected demand has been partially responsible for the oversupply of the last few quarters, as capacity that had been allocated for LCD TVs was shifted to cut panels for computer monitors, she said.
More plants are expected to come online by the end of the year.
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