Increasing number of firms enter Tablet PC market; 12.1” and below panel shipments bucks trend and rises by 8% MoM
Based on the latest survey by WitsView, the aggregated large-sized panel shipments dropped to 56.88 million units during Dec10, down by 2.4% MoM. As 2010 drew to a close, downstream clients performed stricter inventory adjustments during the year-end. Meanwhile, due to the severe winter storms that swept across the northern hemisphere, the traditional Christmas sales performance was weaker than expected. This caused downstream clients to be more conservative in their pull-in from panel makers. Following the huge jump in panel shipments during November, signs have appeared that growth has started to slow.
Since 4Q10, as the IT panel prices hit bottom, panel makers aggressively increased their utilization rates to meet the market demand, which resulted in the IT panel shipments to increase during Nov10. However, due to the weakening momentum in the inventory replenishments and growing pressure to control the year-end inventory levels, monitor and NB (above 12.1”) panel shipments respectively fell by 2.3% and 4.3% MoM in Dec10. Although TV panel shipments were supposedly being supported by preparations for the upcoming Chinese Lunar New Year and launch of new Spring models, the efficiency improvements that were being conducted by some panel makers on their production lines dragged down shipments. In Dec10, instead of the originally expected flat growth, they instead fell by 4.6% MoM.
Amid high expectations that the tablet PC market will see strong growth in 2011, brand vendors aggressively prepared for the launch of related products in an attempt to get a bigger piece of the pie. Shipments of the below 12.1” netbooks and tablet PCs both experienced an increase over Nov10. Specifically, the below 12.1” netbook shipments rose by 12.8% MoM. Much of the growth was attributed to the market launch of many related tablet products by Tier 2 and 3 budget brands, thereby boosting shipments of the 10.1” panels. At the same time, aside from the development of the 9.7” iPad panel, panel makers also started to produce in small numbers tablet PC panels with wide-viewing angles features. As the panel size range has started to extend to the 7” and 10.1” segments, it helped drive up the tablet PC panel shipments to grow by 1.3% MoM.
Table 1: TFT-LCD Panel Shipment in Dec-10 (K units)
On an area basis, the aggregated large-sized panel area shipments in Dec10 dropped 4.7% MoM to 9.5 million square meters. Specifically, the below 12.1” netbooks grew by 14.3% MoM to 137K square meters. Meanwhile, the tablet PCs rose by 1.2% MoM to 88K square meters. Finally, the monitor, above 12.1 NB and TV panels respectively fell to 2.15 million, 978 K and 6.14 million square meters, down by 3.4%, 4.4% and 5.7% over the previous month.
Table 2: TFT-LCD Panel Area Shipment in Dec-10 (K square meter)
Size Wise:
LCD TV panels:
During Dec10, the shipment ratio of the below small-sized 26” TV fell from 23.8% in Nov10 to 23.4%. Specifically, only the 21.5”/21.6”W and 18.5”W saw a more evident increase, respectively rising from 4.5% and 3.3% to 5.5% and 4.2%. Meanwhile, the 32” shipment ratio grew from 40% to 42.8%, exhibiting the largest monthly growth among the various sizes. By contrast, the 37” fell from 6.1% to 5.3%. As for the 40” and above, their shipment ratio dropped by 1.7%. Only the 47” and 55” saw a bigger growth, where the ratio climbed respectively from 1.7% and 2.1% to 2.3%.
NB panels (include tablet PCs):
Amid the anticipated market growth of tablet PCs, the below 12.1” panel shipment ratio increased by 2.5% MoM. Specifically, the 10.1” and 11.6” respectively grew from 15.1% and 1.7% to 17.2% and 2.5%. As for the above 12.1” segment, the shipment ratio fell from 70.4% to 68%. Particularly, the 15.6”W rose from 32.9% to 33.9%, while the 14.0”W slipped from 17.7% to 17.4%. Meanwhile, the 17.3”W dropped from 5.3% to 3.9%, down by 1.4% MoM.
Monitor panels:
In Dec10, the shipment ratio of the below 20”W grew by 2.1% MoM, a reflection of the panel order increase from commercial markets. The 19”, 18.5”W respectively saw their ratio rise from 4.9% and 20.2% to 6.2% and 20.9%. Meanwhile, for the above 20”W segment, aside from the slight 0.1% increase of the 22”W and 24”W(16:9), the shipment ratio of the other sizes were either flat or trended downwards.
Conclusion:
Although panel makers rapidly increased their utilization rates after 4Q10 in response to IT panel prices hitting bottom, the weaker-than-expected sales performance during the traditional hot season has rendered downstream clients to change their mindset in the way they purchase panels. Based on WitsView’s observations, the current IT panel pull-in is not being triggered by the end market demand. Instead, it is the strategic planning of downstream Sis or brand vendors in view of their respective inventory levels and assessment of the current panel price trend. This is why panel prices have not gone up simultaneously with the notable panel shipment growth, where it still lies at the cash cost level. Meanwhile, even though the TV panel demand is being stimulated by preparations for the upcoming Chinese Lunar New Year holidays, the momentum is expected to become more sluggish after 1Q11. Once demand for TV panels slow down, it will likely negatively affect the IT panel supply and price trend. Thus, it is worthy to pay attention on how panel makers adjust their current respective utilization rates. From a supply standpoint, as the depreciation costs of below G6 lines has dropped significantly for the major panel makers, they will have more flexibility in adjusting their utilization rates. In terms of demand, as downstream clients have not yet substantially lowered their subsequent demand forecast, panel makers are still holding a wait and see attitude regarding their panel capacity allocation. Nevertheless, after 1Q11 oversupply pressure may unfortunately reemerge again. If this occurs, it is suggested that appropriate utilization rate adjustments be made in stabilizing the market.
