The recovery in the liquid-crystal-display (LCD) industry will arrive several months later than expected as overcapacity further drives down prices, investment research firm Merrill Lynch said yesterday.
The comments came after LG.Philips LCD Co, the world's top LCD panel maker, on Tuesday lowered its forecast for panel prices and shipments in the first quarter. The panel maker, however, raised its outlook for profits on falling costs.
"We don't think it's something new ... Prices are falling faster than expected. The strength of growth momentum of all panel companies is weakening," Merrill Lynch technology analyst Daniel Kim told reporters after the conclusion of the second day of the firm's annual technology forum in Taipei.
The market expects panel prices to stabilize this month or next, and the rebound would be pushed back another few months, Kim said.
Kim blamed fast capacity growth for the unexpected fall in prices.
"This has nothing to do with demand ... However, the capacity growth rate is faster than the demand growth rate, especially [from] the two South Korean companies," Kim said. "That is resulting in the oversupply."
LG.Philips LCD and Samsung Electronics Co have ramped up their new production lines, which manufacture panels for big-screen slim units such as 40-inch and 42-inch TVs, rather than for more mainstream 32-inch TVs.
Kim expects panel prices for TVs and computers to be weak before the TV shopping season in the second half of the year.
Another Merrill Lynch analyst, Jeffrey Su (蘇志凱), said the firm had retained an "overweight" rating on the LCD component sector, especially Coretronic Corp (中光電), chipmaker Novatek Microelectronics Corp (聯詠) and the Hong Kong-listed LCD TV and computer monitor assembler TPV Technology Ltd (冠捷).
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