Panel makers huge financial losses triggers another component price war

by WitsView on Jan.23 2009

As first tier TFT makers swing to huge financial losses in 4Q08, due to the impact from the faltering global economy, obtaining further material costdown is one of the most efficient ways to improve businesses. Thus, the component price war is expected to be exceptionally intense this quarter.

Glass substrate

Given the rapid and severe market demand slowdown, glass substrate makers not only conductedlarge-scale plant maintenance, they have also been forced to make larger price concessions. Looking at the different glass generation sizes, due to the large procurement of 5G and 6G glass substrates, and relatively mature production yield rates of such glass sizes, suppliers are willing to cut prices. In addition, for the 7.5G, as its efficient cut sizes are TV panels, which is expected to show the strongest growth potential this year, panel makers are also demanding larger price cuts. The quarterly drop is expected to hit 5 to 7%.

Color Filter

The current low utilization rates have prompted panel makers to focus on consuming their in-house supply. This has made it even more difficult for some professional color filter makers to secure orders. In addition, their offered prices are compared with the panel makers’ in-house production cost, thus forcing them to further reduce their color filter prices. General speaking, the price drop for this quarter is above 10%.

Polarizer

In the monitor segment, although 16:9 models are gaining popularity, the unfavorable margin is weighing on its production volume and will result in a smaller polarizer price drop, roughly the same level as traditional 5:4 or 16:10 models. The drop in the NB sector will be more moderate than in 4Q08. As for the TV portion, although panel makers continue to demand more price cuts, polarizer makers have become more conservative in their pricing. For 1Q09, the drop for the mainstream TV polarizer sizes will be 8~12%.

Driver IC

The driver IC segment currently faces inventory problems. In addition, their customized design makes them uneasy to be shared among different customers or models. It further limits the sales flexibility and also becomes an arguing point for buyers to ask for price cuts.

The price cut of mainstream source IC in 1Q09 will be 8 to 10%. For the new introduced 840 / 960 super hi-channel products, we estimate them to become more mature after 2H09. Due to the weak demand of the market and the gateless design trend, the demand for gate IC continues to decrease. Naturally, the price modification is very obvious.

Backlight unit

The price cut of NB BLU is primarily concentrated on the LED light source. Given the more than 35% price decline for 2008, it has prompted most panel makers and brand vendors to begin developing or adopting such light sources for its NBs. Their main objective for this year is to further narrow the price gap with the CCFL BLU, and stimulate the end product demand. A minimal 10% price decline will be seen in 1Q09.

The price cut of monitor and TV BLU is approximately 10 to 15%. The backlight designs of the 40”W and above TV are also moving to a more low-cost structure. Finally, despite the ongoing power-saving green panel trend, which received much attention last year, the “low-cost” drive will render its demand to be relatively moderate for the time being.

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Panel makers huge financial losses triggers another component price war

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