Large-sized Panel Shipment Dropped by 8% in July; Inventory adjustment to Become the Top Priority in the Supply Chain
According to the latest survey by WitsView, panel shipment reached 50.87 million units in July, decreasing by 8% MoM. The material and labor shortage in 1Q10 resulted in the tight supply of panels, as well as the expectation of supply imbalance; therefore, downstream vendors started to restock aggressively in preparation since 2Q10, leading to the record high panel shipment. However, 2Q10 end-market demand was lower than expected because of the slow season. Accordingly, inventory level among downstream vendors was on the rise. Despite entering the traditional IT product restocking season in July, IT panel demand remained weak. At current stage, inventory adjustment became the main strategy in the supply chain, and it also reflected on the actual panel shipment in July.
Of five applications, LCD TV panel shipment was the only application that increased against the downtrend in July, having 2.1% MoM growth to 17.29 million units. Although LCD TV panel price extended the decline to July, it still had more room for price cut compared to IT panels. Moreover, for downstream vendors’ year-end sales promotion, the price decrease spurred the product pull-in in TV panel. IT panel shipment, on the other hand, recorded a decrease. Considering the shipping cost reduction, downstream vendors increased their ocean shipping ratio and focused on the early restocking for notebook demand in 2Q10. Thus, notebook (≧12.1-inch) panel shipment dropped by 16.4% MoM to 13.58 million units, while netbook (<12.1-inch) panel shipment declined by 12.8% MoM to 2.79 million units since end-market demand shrank. Monitor panel shipment decreased by 9.3% MoM to 16.01 million units because the inventory level among downstream vendors was relatively high which lower their panel demand. Tablet PC panel shipment posted 4% MoM decline to 1.2 million units, yet its base was relatively lower. At current stage, Apple iPad shipment continues to expand, as well as other brand vendors’ plan to launch tablet PCs in 2H10. Thus, tablet PC panel shipment is forecast to maintain its growth momentum.
Table 1: TFT-LCD Panel Shipment in Jul-10 (K units)
The aggregated area shipment in July decreased by 2.8% MoM to 9.16 million square meters. Of individual applications, TV panel shipment inched up by 1.9% MoM to 6.15 million square meters; notebook (≧12.1-inch) panel shipment slumped by 17.8% MoM to 886 thousand square meters, while netbook (<12.1-inch) decreased by 12.9% MoM to 89 thousand square meters; monitor panel shipment dropped by 8.1% MoM to 2 million square meters; tablet PC panel shipment decreased by 4% MoM to 38 thousand square meters.
Table 2: TFT-LCD Panel Area Shipment in Jul-10 (K square meter)
Size Wise
LCD TV panels
In July, shipment ratio of ≦26”LCD TV panels inched up by 0.5% MoM to 23.7%. Among which, shipment ratios of 21.5”/21.6”W, 23.6”W and 22”W posted a relatively substantial increase by 1.3%, 0.5% and 0.3% respectively. 32”W and 37”W increased moderately in shipment unit. The shipment ratios of 32”W remained flat while 37”W rose by 0.2%. The overall shipment ratio of ≧40”W declined by 0.7%; of which 40”/42”W dropped by 1% while 46”/47”W dipped by 0.1%. ≧50”W were up by 0.5%, and 55” had the most substantial increase.
Notebook panels (including tablet PC panels)
In July, global <12.1”W netbook and ≧12.1”W notebook panel shipment ratios are as follows: mainstream 16:9 products such as 15.6”W topped the overall panel shipment ratios with 34.9%, dropped by 1.8% MoM; 14.0”W came in second with 22.6%, recording the largest increase by 2.6%; 13.3”/13.4”W was up by 0.9% while 17.3”W declined by 1.6%. 16:10 shipment ratios slipped by 0.1%. 9.7”was the current mainstream in tablet PC, growing by 0.8% MoM.
LCD monitor panels
In shipment ratios of global LCD monitor panels in July, 18.5”W declined by 3.4% MoM to 17.7%, followed by 19”W which decreased by 1.4% MoM to 16.5% while 21.5”/21.6”W and >20” W reached 14.2% and 10.6% individually, growing by 0.6% and 0.3% respectively. The overall shipment ratio of ≧20” grew by 2.8% MoM, namely, 22”W(+0.9%), 21.5/21.6”W(+0.6%) and 23”W(+0.6%).
Conclusion
WitsView indicated that under the rather high inventory level in the supply chain, firstly, the gradual weakening demand after entering the hot season will help downstream vendors to clear inventory. On the other hand, under continuous decline of panel price, if panel makers are able to control capacity output efficiently, it may lower their inventory level. Hence, panel demand in 3Q10 end to 4Q10 will have to rely on the degree of inventory closeout among downstream customers and capacity adjustment among panel makers; especially if Korea panel makers are not as aggressive as Taiwan panel makers to adjust capacity, the oversupply problem will not be timely solved. Hence, the time for price hitting the bottom will be delayed.
