Small/medium LCD market set for Q4 slowdown

EL SEGUNDO, USA: The last six months have been very strong for small/medium LCD panels mainly used in cell phones—but suppliers don’t expect the good times to last in the fourth quarter, spurring them to slow production and restrain inventories, according to iSuppli Corp.

Unit shipments from the top Taiwanese suppliers, which are growing to account for a significant portion of the small/medium display business, rose by 53.1 percent in the second quarter of 2009 compared to the first quarter.

During the first two months of the third quarter of 2009, these panel suppliers achieved 93 percent of the shipments they made for the entire third quarter of 2008.

The worldwide Average Selling Price (ASP) for small/medium displays rose to $11.40 at the end of the third quarter in September, up 1.3 percent from $11.20 at the end of the second quarter in June.

However, growth is decelerating in the fourth quarter, with iSuppli’s August forecast calling for a scant 0.2 percent rise in global revenue. This is causing small/medium display manufacturers to become more cautious in their approach to the market.

“Suppliers are preparing for what they believe will be a deceleration in demand in the fourth quarter, traditionally a slower period because of the end of the holiday buying rush,” said Vinita Jakhanwal, principal analyst for small and medium displays at iSuppli.

“Demand in the third quarter was boosted as tier-1 OEMs pulled in orders for the holiday season. This means that some orders that might have been placed in the fourth quarter occurred in the third quarter instead. Demand also was fueled by the arrival of the Chinese Golden Week. Given these factors, combined with ongoing economic concerns, panel suppliers in the fourth quarter are reducing capacity and keeping a tight reign on inventories in order to stabilize prices.”

The figure presents monthly ASPs for small/medium displays worldwide. iSuppli defines small/medium displays as those having a diagonal dimension of less than 10 inches.Source: iSuppli, Oct. 2009

Strong August
In the small- to medium-sized display sector, panel shipments rose for most suppliers in August, but declined for three of the seven Taiwanese suppliers that iSuppli tracks on a monthly basis.

However, the drop suffered by these three suppliers was not due to any inherent weakness on their part. Rather, it was mainly because of the large numbers reported in July, which made August appear weak in comparison for these specific suppliers.

Overall, August shipments were strong compared to the earlier months. Also boosting Taiwanese supplier shipments was the strong demand for non-mobile medium-sized panels, which are used in low-cost netbook PCs, portable DVD players and Digital Photo Frames (DPFs).

The strong results experienced by the Taiwanese did not apply to Japanese LCD suppliers, which are being impacted by the slowdown in demand for mobile-phone displays. Financial restructuring among the Japanese, the closing of their old fabs and their reliance on Tier-1 OEMs will lead to about a 9 percent decline in shipments from Japan in 2009.

Source: iSuppli, USA