1Q11 Global large size panel shipment dropped 6.5% QoQ to 1.57 million units
◆ Overall Panel Shipment Review for 1Q11
Demand at the terminal consumer market at the first quarter of 2011, a traditional low season, was further dented by the glooming factors such as European credit crises, turmoil in the Middle East, skyrocketing oil prices and global inflation worries. As a result, the global large size panel shipment in Q1 slipped 6.5% compare to the previous quarter to 1.57 million units (and only slightly increased 5% YoY). Meanwhile, WitsView also found that compared to the shipment from Q4 2009 to Q1 last year, which saw a QoQ growth, the 2011 Q1 panel shipment returned to the crystal cycle pattern of QoQ decrease. This actually helps move the overall LCD industry to a healthier trend and also ending the abnormal situations in which traditional high season saw low demand while low season experienced substantial demand, both of which can disrupt the balance of panel pricing.
Units : K pcs
The major reason behind the drop of large size panel shipment in 1Q11 is because downstream businesses increased production and inventory levels in anticipation of demands in Q4 2010. However, as the expected high demand did not materialize, businesses cut back on their purchase of panels as they had digested excess stockpiles both in their inventory and in distributor ends in Q1. On the other hand, the reduction of working days, manpower and material in February due to Chinese New Year holiday also has significantly lowered the shipment of panel modules.
View from the four major applications: Downstream brands in the TV market pulled conservatively in the traditional low season of Q1 as they have to digest the excess inventory spilled over from Q4 last year. As a result, the TV panel demand saw a drop of 10.8% QoQ. Impacted by similar factors, IT monitor panel shipments dropped 5% QoQ. Notebook panels saw QoQ shipment drop of 4.4% as a design defect of Sandy Bridge processor chip delayed the delivery of the panels.
On the other hand, the situation was much different in the Tablet PC panel market. Tablet devices have gained immediate popularity since the launch of i-Pad last year. In Q1 2011, Apple Inc. continued its advance with an upgraded model i-Pad 2, which, however, carries the same price tag as its predecessor. Other major brands followed suit with their versions of tablet devices running Android OS, leading the demand of tablet panel to grow by 10.8% QoQ against the trend of low Q1 demand. Compared to the popularity of Tablet PCs, the netbooks, less comparative in both price and functionality, have seen their market invaded by the niche devices and is shrinking continually. Some panel makers even cut back on production of less profitable netbooks panels to spare extra capacity for tablet panel. As a result, netbook panels of below 12’1” recorded a QoQ drop of 14.3%
◆ TV panel shipment
Global LCD TV panel shipment reached 46.9 million in 1Q11, dropping 10.8% compared to the last quarter but grown by 4% YoY. Learning from the excessive inventory building by downstream customers in the first half of 2010, downstream customers observed the terminal market demand more carefully to make their production and sales plans this year. In 1Q11, they all employed a more prudent and rational procurement strategy. Although TV panel shipment declined in January and February due to the impact of the traditional low season. Shipment actually saw a MoM growth in March as downstream brands and SI are refilling their inventory and putting new models on shelf before the May Day holiday in mainland China. Size wise, the shipment ratio of small models of 26” or below dropped from 23.5% to 21.3%. Shipment ratio for ≧ 32” panels increased from 41.4% to 42.6%. 37” panel recorded a shipment ratio drop from 6% to 4.3%, while ratio for shipment of panels 40” or above jumped from 29.2% and 31.8%.
◆ Monitor panel shipment
Global LCD monitor panel shipment reached 49.5 million in 1Q11, dropping 5% compared to the last quarter and by 6% YoY. The sluggish demand in monitor consumer market led to panel shipment decline in Q1. Shipment ratio of panel <20”W slipped by 2.3% from 56.7% to 54.4% , in which ratio for 19”W panels slid 3.3% from 19% in last quarter to 15.6%. The relatively stable demand in the commercial market helped ratios for 17”, 18.5”W and 19” to grow from 0.2%, 20.4% and 5.8% to 0.3%, 22.9% and 6.3%, respectively. In the ≧20”W category, ratio for 21.5”/21.6”W panels went up the most, jumping 1.1% from 13.7% to 14.8%, while ratio for 27” panels came second, increasing from 1.6% to 2.5%.
◆ Notebook panel shipment (include Tablet PC panel)
Global notebook and netbook panel shipments in 1Q11 dropped by 4.4% and 14.3% QoQ to 41.8 million and 9.8 million units respectively. Notebook panel shipment recorded a YoY growth of 4% while netbook panel shipment dropped substantially by 6%, signaling the plight for the dwindling netbook market. Tablet panel shipment surged 10.8% QoQ to 9.1 million units, reflecting the simmering tablet devices battles led by Apple’s iPad and the continual upward trend for tablet PC panel demand.
Impacted by the traditional low season, notebook panel shipment saw MoM drop in January and February. However, as the design defect of the Sandy Bridge processor chip was solved in March, downstream brands and SI can offer their new models equipped with the latest processor. Notebook panel shipment also saw MoM growth in March. Size wise, shipment ratio <12.1” panels increased from 31.1% to 31.2%, in which 7” and 10.1”W(16:10) tablet panels saw shipment ratio surged substantially from 0.3% and 0.1% to 1.8% and 1.3% respectively. 10.1”W(16:9) panels used by netbooks, however, suffered a shipment ratio drop from 15.8% to 14.3%. For the ≧12.1” panels used by notebooks, the shipment ratio for 15.6”W panels slipped 1.5% QoQ from 33.7% to 32.1%. Ratio for 14.0”W panels surged 4% from 16.4% to 20.4%.
◆Regional TFT-LCD Panel Shipment
Observing the regional large size TFT-LCD panel shipment in 1Q11, since the Korean company Samsung began its remodeling of its new generation wire copper process production line at the end of last year, AMLCD could not successfully supply TV panels to its mother company Samsung. Moreover, after Hon Hai Precision bought the Sony’s overseas TV assembly factory, it began recommending panels by its affiliated company Chimei Innolux to Sony. Under the benefits of order transfers in Q1, the total shipment market share by Taiwanese panel makers recovered from 39.1% to 40.5%. Due to the remodeling of production process, Korean panel makers lost production capacity and saw their shipment market share drop from 53.7% to 51.7%. In which the shipment ratio of TV panels for Taiwanese businesses surged against the trend from 37.8% to 41.1%. Although both Taiwanese and Korean makers saw drops in monitor panel shipment, Taiwanese panel maker still led their Korean counterpart with their 45.6% market share to the Korean’s 44%. Although Japan’s Eco-Point subsidy policy has ended, Japanese panel maker Sharp had high production volume due to its annual accounting, thereby pushing Japanese market share in TV panel shipment from 8.4% to 9.1%. However, the feeble consumer climate in Japan after the March 11 earthquake has caused Sharp to announce the shut down of two of its panel fabs(G8/G10) due to its recent excessive TV stockpile. Due to BOE’s development of G6 production capacity, panel makers in China began actively hunting for IT panel orders. As a result, the shipment ratios of monitor, notebook, netbook and tablet panels in China surged QoQ.
◆ Panel ASP
1Q11 panel ASP by unit reached the bottom in Q1 and jumped from $68 to $70 as panel markers can no longer bear losses due to price cuts and as IT panel prices have been hovering around the cash cost level for too long due to uncertain demand at the terminal market. ASP for TV panels reduced by 4.2% from $189 to $182 as panel prices continued to drop. Overall ASP declined by 4.4% from $97 to $93. In terms of Panel ASP by area, ASP per square meter dropped 4.6% from $174 in 4Q10 to $166 in 1Q11.
The QoQ decline in global shipment of large panels in 1Q11 reasonably reflected the effects of low season on demands. Although in March the market had demand for inventory refill for China’s May 1st holiday and new model launches during spring season, downstream brands and vendors had both made reasonable production and sales plans, resulting in no excess inventory build-up. Moreover, WitsView forecasts a 10% to 13 % growth of overall panel demand in Q2 compared to Q1. If panel makers can adequately allocate their production capacity and maintain inventory at healthy level, they will help boost panel prices before the high season of the second half of the year comes.
