A Fleeting Rebound in Monitor Panel Prices

by WitsView on Dec.07 2010

Based on the latest survey by WitsView, a research division of TrendForce, the significant production cutback, coupled by the aggressive inventory adjustment among downstream customers in 3Q10, monitor panel prices were first stabilized and rebounded in November which merely posted a modest increase by $1~2, while large-sized notebook panel prices remained unchanged. Accordingly, the growth momentum in IT panel prices was apparently held back. TV panel prices, on the other hand, continued the downtrend.

Even though monitor panel prices went up moderately, the supply chain began to restock early given the possible price increase as well as the upcoming Chinese New Year holidays and the serious labor shortage problem around that period, which drove panel makers to ramp up the utilization rate substantially in November. However, the Black Friday sales results in North America merely achieved the initial target, which appeared to give a clear warning to the market that panel demand is likely to drop due to the decreasing orders, while panel supply will increase because of the capacity ramp-up. In 4Q10, the balance between supply and demand is expected to be reversed, and the market may suffer the supply glut, which is unfavorable to the panel price trend in December – monitor and notebook panel prices may inch up or slip while TV panel prices may continue the downtrend; of which, the price decline in LED TV panels will possibly be larger than that in CCFL counterpart.(See figure 1)

TV Panel Price Update

Black Friday is usually used as the indicator to how the Christmas sales will go in the US and Europe. Currently, amid the pressure from the financial loss in 3Q10, top-tier brand vendors did not launch price promotions aggressively on the Black Friday 2010, and their sales mainly focused on >40” models as 50” prices fell below $1000. For second- and third-tier vendors as well as non-brand vendors, they launched price promotions on several CCFL LCD TVs in specific sizes – Sansui’s 19W was down to $98; Emerson’s 32W fell at $198; Westinghouse’s 40W was pushed down to $298. The important fact is that only products coming with low price tag could stimulate consumer purchase. Thus, major vendors believed that the Black Friday sales was not as brisk in 2010, and merely reached the initial goal. In other words, the market appeared to show its conservative perspective toward the sales performance for the Christmas holiday and prior to the New Year. (See figure 2)

The price decline in CCFL LCD TV panels has arrived at 15~20% since 3Q10, so the room for price reduction by the end of the year is limited even though the pressure of price cut requested by customers remains. However, panel makers take a rather aggressive attitude toward the strategy for LED panel prices to fight for customers’ orders, especially for the forthcoming demand from the customers in China. Please refer to the table listed below on the price gap between LED TV panel modules and CCFL counterparts at year-end season.

Monitor Panel Price Update

In monitor panel prices, whether the price trend will continue to go up in December is taken conservatively at current stage. As we stated in November, the uncertain factors in the market constrained the uptrend in panel prices, in our view, which may attribute to the following: firstly, whether supply and demand was really under the balance remained uncertain; secondly, the timing of the price increase was at the beginning of the slow season. These two factors broke the balance between supply and demand in the market after panel makers increased the utilization rate significantly. Furthermore, the end-market sales was weak, causing the inventory level to rise once again which had been gradually going down. Hence, the uptrend in monitor panel prices was evidently held back in early December. In addition, the pressure of inventory control among downstream SIs and brand vendors was on the rise at year end, so the demand for panels may further go down. (See figure 3)

Notebook Panel Price Update

Based on WitsView’s survey on downstream shipments, when the distribution for the year-end hot season had completed in 3Q10, notebook panel shipments went downward MoM in 4Q10, and the prices remained heavily pressured in December. Smartphones, tablet devices and Xbox’s Kinect are highly expected to be the most desirable tech gifts for Christmas, while notebook sales is likely to be cannibalized. Additionally, even though downstream customers restocked early for the upcoming Chinese New Year holidays and because of the labor shortage problem in China, the end-market demand was still unclear.(See figure 4)

Conclusion

Driven by the strong appreciation of the euro, the market slightly recovered from the crisis in Europe in 3Q10. However, that Ireland requested an EU bailout stoked fears of debt crisis in the eurozone, which led to the depreciation of the euro. In addition, Federal Reserve Chairman Ben Bernanke said this month that Fed may launch a third round of quantitative easing (QE3), suggesting that the recovery in the US economy was not as fast as expected. Therefore, the end-market demand did not grow substantially. Based on the Black Friday 2010 sales, low-pricing products were still the top pick for consumers in their purchasing. While the price tags of LED and 3D TV remained high, consumers were reluctant to make the purchase, which reversed panel makers’ attitude toward the 2011 LED TV penetration rate from the initial 60~70% forecast to 50% at least.

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