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US research firm expects rebound for FPD makers

Global flat-panel-display (FPD) makers are expected to return to the black as early as the current quarter as prices rebound from the industry's trough over the past four quarters, market researcher DisplaySearch forecast yesterday.

The Austin-Texas researcher attributed the faster-than-expected recovery to careful inventory control of liquid-crystal-display (LCD) panel suppliers and buyers.

"There is no inventory in channels. Demand is very strong particularly for TVs in April, while supply is tight," Ross Young, president and founder of DisplaySearch, said on the sidelines of the annual flat-panel forum in Taipei.

Around 300 local and foreign companies -- including Samsung Electronics Co, LG Philips LCD Co and Sharp Corp -- joined the two-day 2007 DisplaySearch Taiwan FPD International Conference.

Supported by easing glut, computer panel prices are expected to bounce back by 3 percent to 10 percent this month from last month, when computer panels led the price pick-up, Young said yesterday.

Price for TV panels is expected to pick up by 1 percent to 2 percent led by the mainstay 32-inch panels, reversing constant downtrend, he said. A 32-inch TV screen is priced at US$305, for instance, down nearly 40 percent from a year ago, DisplaySearch said.

"The thin-film-transistor (TFT) industry is poised to recover," Young said. "The industry will go back to profitability in the second quarter, or the third quarter."

Young's comments were largely in line with the projections of major LCD panel makers such as AU Optronics Corp (友達光電), which said the worst was over and factory usage would rise to 100 percent this month and next month.

Pre-tax profit margin for global panel makers is expected to recover to double-digit percent in the second half of this year, ending four straight quarters of losses since the second quarter of last year with the margin at minus 13 percent, Young predicted.

He expected next year to be better than this year in terms of profit, citing well-controlled capital spending. Panel makers would only spend US$7.6 billion on new equipments this year, down 38 percent from last year, DisplaySearch said.

From a longer-term perspective, annual revenue growth in percent for the FPD industry, including plasma technologies, is slowing to single-digit figures, beginning with this year, DisplaySearch said.

The annual growth for the FPD industry would slow to 5 percent this year and to only 2 percent in 2010, compared to 11 percent last year and 20 percent in 2005, because of price erosion and limited new demand, DisplaySearch estimated.

TVs replaced computers as the main source of demand for flat panels, but the demand for larger TVs was limited and demand for computers was sliding, Young said.

The TFT industry will also be part of the downtrend as the annual growth rate should be around 6 percent this year, with US$73.7 billion in revenues and only 0.22 percent in 2010, with US$84 billion in revenues, the statistics showed.

As a result, Young said it would be unwise to build more eighth-generation (8G) factories, which are used to cut 52-inch or 57-inch TV screens from glass substrates.

Taiwanese panel makers are cautious about building more 8G plants than competitors such as LG Philips LCD, saying that a lack of support for own-brand TVs made the investment risky.
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