Major Taiwanese LCD panel makers AUO Corp (友達) and Innolux Corp (群創) have a chance to swing back into the black in September ahead of their Chinese competitors, benefiting from further panel price hikes and free from heavy depreciation expenses, market researcher Omdia said.
The researcher expects the prices of TV panels to climb about 3 to 5 percent this month, extending a dramatic uptick in the first few months of this year, while the prices of panels used in computers and monitors have started picking up this month by about 3 percent.
Last month, manufacturers raised prices for computer and monitor panels on their distribution networks for the first time since the industry slump in the second half last year due to a severe surplus, Omdia said.
Photo: Chen Mei-ying, Taipei Times
“The price increases are mainly driven by a reduction in supply as panel manufacturers have been curbing factory utilization and some [companies in] South Korea shut down factories. Overall, end market demand remains tepid this year,” Omdia senior researcher David Hsieh (謝勤益) said on Thursday at its annual technology seminar in Taipei.
PC manufacturers are expected to replenish panel inventory in the second half, as Dell, HP and Lenovo are approaching the end of their inventory digestion cycle, the researcher said.
That was a stark difference from last summer when Samsung Electronics Co halted panel purchases, heralding the arrival of an oversupply-driven slump.
To eke out a profit, flat-panel makers lowered factory utilization rates for TV panels to about 80 percent, and 70 percent for computer and monitor panels, Hsieh said.
“The worst period for panel manufacturers has passed, but the best has yet to come,” he said. “The price increases will be mild this year. We do not rule out the possibility of a panel shortage next year as no new capacity has been installed over the past few years.”
It would take about two years for panel makers to ramp up new production lines, Hsieh said.
With panel production under strict control, total panel supply is forecast to drop 1.6 percent year-on-year, following the closures of some manufacturing facilities from LG Display, AUO and Innolux, while demand is expected to expand 4 percent, Hsieh said.
That meant the industry is on track for a supply-demand balance this year, the analyst said.
Taiwanese panel makers would see a quicker recovery as they have paid up almost all depreciation costs for manufacturing facilities, Hsieh said.
After a grueling oversupply problem, it might be hard to imagine that there might be a panel shortage next year, Hsieh said.
However, based on Omdia’s projection, global panel demand would expand 8 percent year-on-year next year, much faster than 2 percent projected growth in panel capacity, he said.
“We believe a new crystal cycle is restarting now,” Hsieh said. “Next year, TV replacement demand would fuel flat-panel demand significantly.”
AUO shares yesterday rallied 1.36 percent to NT$18.65, while the stock price of Innolux inched up 0.34 percent to NT$14.7. Smaller panel maker HannStar Display Corp’s (瀚宇彩晶) share price jumped 1.89 percent to NT$13.45. The TAIEX ended 0.27 percent lower yesterday.
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