LCD panel makers are cutting production to limit oversupply, which has caused prices to decline and eroded profit margins, Austin, Texas-based research firm DisplaySearch said in its latest report.
Slow end product demand and an inventory overhang are driving panel prices into a six-month downward spiral, the US researcher said.
“Prices of some screen sizes are close to or even well below the cash costs [of panel makers],” DisplaySearch said in a report issued on Tuesday.
CAUTIOUS
Even so, panel buyers remain cautious about stocking panels ahead of the holiday shopping season in the fourth quarter, it added.
Bearing the brunt of the recent correction, LCD monitor panel prices are expected to fall by 3 percent to 7 percent in the second half of this month, DisplaySearch said.
“Panel makers are expected to cut back factory utilization due to quickly eroding profit margins, and we’re expecting to see stabilization or modest price decline for some sizes ... in the coming month,” DisplaySearch said.
The nation’s major LCD panel makers — including Chimei Innolux Corp (奇美電子) and AU Optronics Corp (AUO, 友達光電) — have said they would lower equipment loading rates to reduce supply and bolster panel prices.
AUO chairman Lee Kun-yao (李焜耀) told reporters on Tuesday, however, that there would be limited room for panel prices to drop further as Chinese TV makers are close to finishing their inventory digestion and demand picks up with the start of the traditional shopping season on Oct. 1.
Besides, panel makers might be reluctant to reduce prices as panel prices have fallen to their cost level, Lee said.
The prices of panels for LCD TVs are expected to drop by 1 percent to 4 percent in the second half of this month from the first half, the report said.
“Demand in the main regional markets, especially North America, is weak now, so many TV brands are lowering set prices further,” the researcher said, adding that TV makers plan to slash prices to spur demand and they were passing on the pricing pressure to panel suppliers.
Stagnant demand could bring down prices for mainstream 32-inch LCD panels by another 3 percent to US$169 per unit, the report said.
FLAT PRICING
Prices for notebook computer panels are expected to be flat because of strict production and inventory control by panel makers, the researcher said.
The end market has improved from previous months and is expected to see month-on-month growth again this quarter, DisplaySearch said.
Given supply constraints and a demand recovery, the market is expected to return to a healthy cycle by next quarter, it added.
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