The flat-display panel industry is unlikely to get out of the woods until the second half of the year as new products scheduled to come out later this year will hurt chances of a turnaround, a Taipei-based researcher said yesterday.
The bearish outlook came against the industry's anticipation of a pickup during the second quarter, as drastic price corrections in the past quarters have whetted consumers' appetite for computer monitors and slim-screen TVs.
"Demand for liquid crystal display [LCD] panels has looked encouraging recently, but we doubt the strength will sustain the upcoming electronics off season amid growing output," said Annabelle Hsu (徐美雯), a senior analyst with the Market Intelligence Center (MIC, 市場情報中心).
Major players in the thin film transistor (TFT) LCD industry such as AU Optronics Corp (友達光電) and South Korea's Samsung Electronics Co are all scheduled to ramp up their next-generation factories, which will produce big glass substrates for LCD TVs, in the first six months.
"This ill-timed output expansion could dash the hope for an end to the overcapacity-driven glut," Hsu said.
Built on that conservative calculation, MIC expects supply of TFT-LCD screens may exceed demand by 5 percent, or 7 percent in the first six months.
Taiwanese makers of TFT-LCD panels for computers and TVs are more vulnerable to oversupply due to weaker cost-saving capabilities than their South Korean competitors, Hsu said.
Weaker profitability of local firms would reflect in their bottom line for the last quarter, when panel prices crumbled to break the cost level of local makers, she said.
A 17-inch LCD screen for computers has plunged to average US$152 in the second half of this month, according to online market researcher WitsView.
South Korean LG Philips LCD Co and Samsung Electronics have beat most analysts' expectations by eking out profits amid industrial recession, while not one Taiwanese company has done so.
AU Optronics, the nation's biggest maker of LCD panels, said it might lose NT$1 billion in the last quarter.
Smaller local competitors said they would lose more.
"It's becoming more and more difficult for local companies to make money from the highly volatile TFT-LCD industry," Hsu said.
Local companies posted four straight losing quarters during last industry slump in 2002, she said.
"This time, they are likely to repeat that experience," Hsu said.
The research house said there is still the likelihood that a prolonged overcapacity-driven glut in the second half could be reversed, she said.
"Growth strength for LCD TVs remains the key, especially when most new products are targeting this market," Hsu said.
Global demand for LCD TVs is expected to soar 87 percent to 15.5 million units this year, up from the anemic 8.3 million estimate last year, boosted by falling prices, according to the MIC report released yesterday.