Display Market Perspective
Open market activity for the New Year is starting off slowly. Purchases supporting retail sales for the Chinese New Year have tailed off and market indications are on an overall downward trend. However, we do not expect to see a hard landing as witnessed in Q2 of 2006. Manufacturers have become much more adept in allocating capacity between product lines. Notebooks have already taken their tumble. Expect to see pricing for both monitors and TVs to experience the bulk of the price drops.
Monitor
Prices for mainstream sizes continue to soften with both 17” and 19” 4:3 aspect ratio expected to drop between $5 and $10 moving into February. With additional capacity coming on-line, we expect to see continued downward pricing pressure. 15” size panels are expected to hold firm. However, they may possibly move into shortage due to the demand from the industrial sector.
Notebook
Horizon expects to see prices move slightly downward for panels over the next month as pricing has already settled in Q4 of 2006. We are seeing some spot shortages for 13.1” and 13.3” wide screen panels, driven by Apple and Sony, which are fetching premiums in excess of $40 depending on part number and quantity. AU part number B133EW01 is in particular demand. We are also seeing strong demand for 15” 4:3 aspect ratio panels as manufacturers are limiting production to move customers to newer designs. As a result, open market products are seeing hefty premiums of $50.00 plus over direct. We are seeing more parity with direct and open market pricing for 16:9 aspect product as the market transitions to higher resolution monitors. Vista, which is designed to take advantage of the 16:9 viewing ratio, will certainly hasten the transition of the market to wide viewing angle panels. Horizon has seen a strong demand from the repair segment. 15” and 15.4” sizes are particularly targeted especially since manufacturers are shifting capacity to higher volume mainstream sizes. Models in high demand: Samsung part number LTN154X1 and Toshiba panel LTD154EZ0C.
Industrial/Medical
First quarter procurement activity is expected to slow with the silver lining being a reported increase in new product design introductions. The expected result is an increase in open market activity as manufacturers’ transition to the newly introduced products and focus on the support of recently obsolete product wanes. We are seeing an increase in activity from tier two OEMs. They are finding minimal support from manufacturer Prime View due to an organizational restructuring, which is impacting 3.5” through 10.4” sizes. AU has directed Pro Mate to focus on tier one accounts, leaving tier two’s scrambling for 5.1” through 10.4” sized panels. One area of note, that is quite interesting, is the unforeseen impact of digital signage on the industrial market. With the rapid introduction and acceptance of touch screen technology for large screens, it is beginning to filter down to smaller size applications in industrial applications.
TV
The TV segment is not a focal point for open market activity. However, it does play a vital role in the evaluation of the display market due to the dominant role TVs play in capacity utilization rates. According to Witsview, LCD manufacturers have become much better at managing capacity. As a result, we will not see dramatic price drops as we have witnessed in the past. In turn, this will have a stabilizing effect on the pricing of the entire display market as manufacturers will not have to shift capacity to monitors and notebook panels to absorb excess capacity.
