How Much Will LCD Notebook and Monitor Prices Increase for Q4?
The first and second quarters of this year have seen a dip in inventories for LCD manufacturers which resulted in increased panel prices and shipments. The tight market in LCD notebook and monitor panels is expected to continue through the Q3, before possible adjustments in Q4. This trend is likely to occasion panel shortages in the first quarter of 2015, for several reasons.
First of all, you should expect significantly lowered inventories in the last quarter of 2014 as a result of TV brand promotions for the forthcoming holidays such as China’s October Golden Week, Christmas, Black Friday as well as Thanksgiving. The demand for LCD monitors has been weak on the consumer side but with the expected promotions, consumers are likely to demand more. The commercial segment demand for LCD monitors on the other hand has had positive results which have triggered an increase in demand for 19-inch and 19.5-inch units. This bumped up panel pricing by US$0.10 and US$0.30 respectively for the last bit of Q3 and you can confidently expect this to run into the last quarter of the year.
For the 15.6-inch notebook panels, you can be sure of a price increase of US$0.20-0.40 in the fourth quarter of this year. Notebook panel manufacturers indicate that they will continue to produce limited amounts of supply to prevent a decline in the pricing and focus more on production of tablet applications. According to DisplaySearch observations, 32-inch WXGA open cell TV panels have increased by US$1 mainly as a result of holiday demand in the third quarter and is likely to rise further in the fourth quarter. You will also note that LCD monitor pricing has risen by approximately US$0.10-0.30 for 19-23-inch units according to DisplaySearch statistics.
You can expect a supply growth of 4.5% and a demand growth of 7.9% for the fourth quarter of this year, which will ultimately result in panel shortages. However, conversions of TFT capacity to AMOLED backplane production is likely to reduce effective capacity and ramp-up new fabs – particularly in China – which is likely to consume a lot of time yet it may not run as smoothly as manufacturers hope. These two issues are likely to result in slower growth in effective capacity rather than growth in demand.
The less than 5% growth in TFT capacity (which is remarkably slow) has made component manufacturers quite reluctant to increase their capacity. Although China now produces new components, their reliability and quality is still inferior. There is therefore an impending component shortage (as a result of increased panel capacity) which will ultimately limit panel availability. Development of new panel technologies will call for development of additional components. This together with the high growth rate of hand held devices (which may monopolize foundry capacity and driver IC wafer) and the shift to high resolution may consume additional capacity for optical films and chemicals. This can only sharpen the shortage and in turn drive the cost higher.
Going by the possible adjustments in the last quarter of 2014 and the early quarter of 2015, of the panel inventory which has been building in 2013 /2014, you can certainly expect a more acute shortage in 2015. This will definitely have a significant impact on TV brand panel procurement.