The price of liquid-crystal-display (LCD) panels for computer monitors may experience its first uptick in six months this month, with inventory demand exceeding supply because of widespread production cuts, market researcher DisplaySearch said yesterday.
That would be good news for distressed LCD panel manufacturers weathering the longest slump in the history of the LCD industry, the Austin, Texas-based researcher said in a report yesterday.
Prices for 19-inch wide-format and 18.5-inch wide-format panels for PC monitors may bounce back by US$3 to US$5 per unit this month from last month, DisplaySearch said.
Flat panel makers are declining to sell panels for below the cost of production amid mounting losses, the researcher said.
Prices for notebook and LCD TV panels were expected to hold steady this month, ending a six-month downward spiral, it said.
“The stabilization of panel prices is not because of a surge in demand, but rather due to several reasons,” David Hsieh (謝勤益), a DisplaySearch vice president based in Taipei, said in the report.
“Panel makers are holding capacity utilization to low levels and some plan to cut production further in January,” Hsieh said.
Manufacturers are unable immediately to resume production at unused facilities to fill rush orders from customers, who are unwilling to keep as much inventory as usual in expectation of falling consumer spending, he said.
Speculation has circulated that the supply of 22-inch wide-format panels for LCD monitors was becoming constrained as output has decreased, he said.
In a separate report issued earlier last month, DisplaySearch said Taiwanese panel makers had lowered capacity utilization to below 60 percent this quarter from nearly 100 percent in the second quarter.
South Korean manufacturers cut equipment utilization to less than 80 percent, it said.
“Panel makers are expecting the panel prices to rebound at least back to the cash cost level to prevent further bleeding, which jeopardizes their survival,” Hsieh said.
In addition, panel suppliers have started rejecting orders that offer a unit price lower than production costs, the report said.
“Since there are not any significant increases in demand, it is not clear if price increases are sustainable. But for the panel makers, this seems like the first ray of hope in a long time,” Hsieh said.
The nation’s two largest LCD panel makers, AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子) may see losses of NT$12 billion and NT$16 billion this year, based on a forecast by Yuanta Securities (元大證券).
AU Optronics posted a net income of NT$48.2 billion in the first three quarters of last year and Chi Mei, NT$25.1 billion.
Nomura Securities said in a report earlier this week that it cut its earnings estimates for AU Optronics, although the maker of LCD panels was likely to survive the economic downturn because of its strong financial status.
Nomura analyst Sean Wu (吳翔) wrote in the report that AU Optronics would lose NT$7.88 a share this year — up from his previous forecast of NT$2.45. He predicted Chi Mei would lose NT$7.7 a share this year, compared with NT$4.42 estimated previously.
The brokerage maintained a “neutral” rating on shares of AU Optronics, but cut the target price from NT$22 to NT$21.5.
Nomura downgraded Chi Mei’s shares to a “reduce” rating and said a fair price for the stock was NT$6.8.
Shares of AU Optronics dropped 59.4 percent last year to end at NT$24.7 on Wednesday, while shares of Chi Mei plunged 75.4 percent to NT$10.8 over the same period, the Taiwan Stock Exchange’s tallies showed.
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