Faced with sluggish demand, global LCD panel makers should lower capacity utilization rates to below 85 percent this quarter to ease oversupply and halt falling prices, a Taipei-based research firm said yesterday.
Weak demand, which has caused prices to slump, has driven LCD panel makers into the red in the past two to three quarters. Manufacturers are hoping for a turnaround this quarter as the industry enters its seasonal peak and prices pick up.
However, TrendForce Corp (集邦科技) expects that the eurozone debt crisis and a slowing economic recovery in the US will further weigh on private consumption, leading to an anemic sequential growth of 6 to 8 percent for PC and TV LCD panels this quarter.
This compares with a historical average growth of 25 percent for the third quarter, according to TrendForce.
Growth in the third quarter this year is expected to be “weaker than the seasonal norm because inventories surged above normal levels last quarter as customers were cautious about building inventory ahead of the seasonal peak,” TrendForce analyst Locke Chang (張小彪) said by telephone. “They are concerned that a weak macroeconomy will stifle end product demand.”
Faced with an unfavorable market, “LCD panel makers need to cut production to reach a parity between supply and demand, or they could lose the chance for a turnaround,” Chang said. “Panel manufacturers will have to reduce their capacity utilization rates to below 85 percent in the third quarter.”
The nation’s biggest LCD panel maker, Chimei Innolux Corp (奇美電子), has been in the red since the third quarter of last year, with cumulative losses from the past three quarters totaling NT$41.57 billion (US$1.44 billion). Its rival, AU Optronics Corp (AUO, 友達光電), has also accumulated losses of NT$25.24 billion from the fourth quarter of last year to the first quarter of this year.
Another market researcher, DisplaySearch, expects utilization rates at global LCD panel makers to drop to 85 percent this quarter from 90 percent in the second quarter after soft demand ended a price rebound last month.
AUO dropped 0.58 percent to NT$17.25 yesterday, its lowest level in more than nine years, while Chimei Innolux rose 0.59 percent to NT$17.
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