The stronger-than-usual traditional weak season in 2Q10 will be a stumbling block to the development of the TFT
WitsView indicated in 1HMarch frontline, "Buyers to gain the upper hand over time". Indeed, based on our panel
price survey in 1HApril, panel makers and brand vendors had been gearing up for the Chinese New Year (CNY)
holiday sales prior to the holiday, however, actual sales performance during CNY holiday did not meet the overly-
optimistic expectations, a large volume of LCD TV inventory still needs to be cleared away. Hence, set makers’
demand for panels decreased after March, and TV panel prices showed pressure of decline, and the pressure is
especially high among the >37W products. However, as top-tier TV brand vendors aggressively expand their
market share, TV panel prices are unlikely to plummet in April. Further, the market buzzed with concerns of tight
supply of components such as reflectors and ICs, and because of the market condition on 32W is still steady, panel
makers still hope to moderately increase monitor panel prices in 1HApril. Yet, amid flattish sales in the slow season
and rising inventory, 2HApril prices may not be able to hold against customers’ persistent request. As for
notebooks, end-market sales underperformed in March and there is no significant improvement in demand in
April/May, hence, prices in April may either maintain or dip slightly. Furthermore, some panel makers are planning
to increase notebook panel capacity in 2Q10, which may lead to potential panel oversupply.
According to WitsView’s discussion with major TV and PC set makers in southern China in late March, the
inventory level of TV products (including set and panel) is relatively high, hence, inventory clearing before the
Labor Day holiday is a main focus while investing in the LED TV market. Monitor product sales are flat, and
demand for model upgrades from the commercial market takes place in April and May; currently however, there is
no significant increase in orders for such upgrades. Set makers strategically increased restocking volume before
CNY holiday in preparation for the possible capacity decrease due to labor shortage after CNY holiday. However,
according to set makers, over 80% of the workers returned to work after the holiday, and labor loss was not as
serious as previously anticipated. (See figure 1)
Monitor Panel Price Update
In early April, supply and demand of 32W TV panel market is fairly balanced, and there is tight supply of some
components. These conditions enabled panel makers to increase price by $1~2 in early April. However, as demand
for large-sized LCD TVs gradually weakens, pressure to lower their prices increased; further, end-market sales of
monitors were flattish, and pressure from inventory build-up is also gradually increasing. On a long-term basis, as
retail prices of monitors are more likely to fall, and monitor panel prices are already approaching the peak; this
brings about high cost pressure among downstream customers, making conditions rather unfavorable for stimulating
retail sales. Therefore, monitor panel prices in late April may fall within the $5 range; notably, the price gap of 19W
and 18.5W continues to expand, which may affect customers’ product pull-in. On the other hand, as for the price
difference between LED and CCFL Backlight – it is about $2~3 for the mainstream 18.5W and 19W, and $8~12
for ≧21.5W. Recently, there is buzz in the market about panel makers intentionally increasing the quotation of
LED backlit products, mainly due to top-tier TV vendors’ strong ambition in the LED TV market. Therefore,
monitor products may face tight supply of LEDs. According to WitsView’s upstream component analyst, LED
backlight design will shift toward lowering cost, and the volume of LED chips used will substantially decreased
compared to the previously estimated figures. Hence, once LED TV demand booms, LED chip supply would not
cause possible bottlenecks in the supply chain, instead, it may be the supply of large-sized light guide plate (LGP).
(See figure 2)
TV Panel Price Update
CNY TV sales performance was below market expectations, and inventory build-up led to substantial pressure on
price of >37W large-sized panels. Despite so, as major TV brand vendors gradually introduce their spring models in
2Q10, demand from restocking increased; furthermore, the 2010 Soccer World Cup in South Africa will drive up
demand in Europe. On the other hand, under pressure from the aggressive expansion of Hon Hai Precision this year,
TPV, the world’s largest LCD TV system integrator, will continue to expand the market share of its own brand, and
its OEM volume to solidify its leading position in the market. After Hon Hai Precision acquired Sony’s TV making
facilities in Mexico and Slovakia, compounded by the market buzz of a possible merger with Amtran, it becomes
evident that Chimei Innolux Corp. will focus on the expansion its OEM business as the key strategic direction in the
future. Sony, Vizio and China’s electronic manufacturer may become major outlets for Hon Hai Group’s TV OEM
business. In April, buttressed by TV panel demand from top-tier brands, prices of mainstream sizes 26W, 32W,
37W will either maintain or dip slightly, while prices of ≧40W will fall by $5~10, affected by the declining demand
in China. (See figure 3)
Notebook Panel Price Update
In 2Q10, amid increasing panel supply and flattish end-market demand, the pressure to lower prices naturally
emerges. In April, with declining demand for monitor and TV panels, and flattish notebook sales performance
among top-tier brand vendors, notebook panel prices rose by only $1~2 in March; price trends in April will either
maintain or dip slightly. With the upcoming Taipei Computer Show, leading brand vendors’ aggressive promotion
of newly-launched models will lead to high levels of expectation toward demand in the strong season in 2H10. (See
figure 4)
Conclusion
As market dominance of top-five brand vendors in LCD TV and notebook market expands, their influence on
market supply and demand also increases. Consequently, shares of second- and third-tier brand vendor and OEM
continue to be impacted, hence, the trend of "dominant players expanding their dominance" gradually takes shape.
Current panel prices have reached a relatively high point compared to 2009, which may have significantly
improved panel makers’ profitability; however, high panel prices also increased the burden on downstream
vendors, as it is not conducive to stimulating consumer demand, especially amid the continued decline in retail
prices. If capacity continues to ramp up in 2H10 without a significant demand stimulus, it forces us to become
conservative toward market outlook in 2H10. After all, there are no permanent winners in the market.
