Sat, Jul 19, 2008 - Page 12 News List

Excessive inventories cause LCD panel price decline


The price for liquid-crystal-display (LCD) panels used in computers and televisions may decline in the second half of this month because of excessive inventories, but the fall may slow as some panel manufacturers start cutting production, market researcher DisplaySearch said yesterday.

The price for a mainstream 19-inch LCD panel for a computer monitor is expected to drop by another US$8, or around 7 percent, to US$107 per unit in the second half of this month from two weeks ago, a bi-monthly report released by the Austin, Texas-based researcher said.

“”Panel price pressure remains very heavy. Brands and system integrators are emphasizing inventory adjustments rather than boosting sales in the third quarter as planned,” DisplaySearch said in the report.

Overall however, panel selling prices will still remain above the cost of making them, the researcher said.

“We expect the downtrend to extend into August, but the decline may be less severe as some panel makers have cut production or are seriously considering reducing output [to cope with drastic changes in the market],” said David Hsieh (謝勤益), a vice president of DisplaySearch who is based in Taipei.

TV panel prices have dropped at a slower pace, the DisplaySearch report said. The price of a 32-inch TV panel is expected to fall approximately 7.4 percent month-on-month to US$285 per unit this month, DisplaySearch said.

TV vendors tend to have a more conservative attitude on inventories, as they have remained an issue in Europe and China, DisplaySearch said.

Meanwhile, Morgan Stanley has cut its target price by 20 percent for the nation’s two largest LCD panel suppliers, AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子), to NT$65 and NT$48 for the next 12 months respectively, a report issued on Tuesday said.

Morgan Stanley said its price adjustment was in accordance with a bearish outlook on the industry. But the US brokerage kept its “overweight” rating on the stocks unchanged, citing an attractive valuation, as the stocks price to book value ratios have hit a five-year low.

"We expect the downturn to continue through the second quarter of 2009," executive director of Morgan Stanley's Taipei branch Frank Wang (王安亞) said in the report.

Shares of AU Optronics plunged 6.45 percent to NT$38.45 yesterday, under-performing the TAIEX, which dropped 2.28 percent. Chi Mei Optoelectronics closed down almost at the 7 percent daily limit at NT$26.5.

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