Panel prices are expected to rise by up to 3 percent sequentially this quarter and to hold steady next quarter on the back of healthy panel inventory, as LCD screen makers are expected to produce fewer screens amid technological transition, boding well for flat screen makers’ struggling bottom lines, market researcher NPD DisplaySearch forecast yesterday.
The world’s major panel makers, including LG Display Co and Taiwan’s AU Optronics Corp (AUO, 友達光電) and Chimei Innolux Corp (奇美電子), are allocating part of their capacities to make new high-resolution screens for tablets and TVs, which would cut overall capacities by 5 percent this year, followed by an 8 percent erosion next year because of low yield rate, according to the forecast.
Reduced supply would shrink the gap between panel inventory and demand from TV brands to a healthy 5 percent this quarter, from 6 percent last quarter, after slight supply constraint pushed up prices for flat panels across the board, the US market researcher said.
Price uptick would help panel makers to improve their gross margin, David Hsieh (謝勤益), a vice president of NPD DisplaySearch, told reporters on the sidelines of a forum in Taipei.
“Chimei saw its gross margin rebound to 3.3 percent last quarter. The margin should improve further this quarter, which will raise the odds [of Chimei returning to profitability this quarter],” Hsieh said.
Chimei, the nation’s top panel maker, leads its South Korean rivals in developing new sizes of TV panels, giving the company a stronger bargaining power on prices, Hsieh said.
Chimei and AUO are the only two panel makers in the world supplying 39-inch and 50-inch TV panels, which has generated good demand from emerging markets, he said.
Chimei reported its first positive gross margin last quarter after seven quarters in negative territory. This helped Chimei reduce its quarterly losses to NT$3.72 billion in the three-month period ending in September, from a loss of NT$9.57 billion in the second quarter.
As inventory is expected to remain low through next quarter, panel prices would possibly hold steady during this period, given that TV sales on Black Friday in North America are expected to be strong this year, Hsieh said.
Hsieh expected TV sales during the traditional TV shopping season would grow 5 percent to 10 percent this year from last year, driven by growing demand for larger-sized TVs.
“The [healthy] inventory will not trigger another wave of price drops, even if demand starts to weaken in the slow season,” Hsieh said. “Some panel makers even expect that the first quarter will not be as slack as it has been in the past.”