After two weak quarters, manufacturers are looking to gain control of market pricing by reallocating and reducing capacity where possible. This has OEM’s changing their purchasing strategies. They are going from a reactive mode of buying for immediate needs, to a forecasted model to ensure adequate supply in the upcoming months. This shift in strategies is an indication of the overall market direction. We are seeing tightened conditions across the majority of the platforms and panel sizes.
We expect to see this trend continue for the next several months. Manufacturers would like to keep prices firm while heading into the busy back-to-school season. As always, in these situations, it is a question of whether supplies are really constrained or are manufacturer’s artificially curtailing supply in order to support increased prices. If manufacturers are in fact holding back supply, the dilemma they face is the fear of losing market share to a competitor. It then becomes a question of who blinks first, and drops the price to capture market share resulting in a precipitous price drop.
Monitor
In our last update, we indicated that we expected to see demand for the 19" and 22" wide panels to increase, in turn putting upward pressure on pricing. Our prediction was almost correct. Demand did continue to escalate, but prices did not increase as expected. The 19" and 22" sizes are the new sweet spot for consumers and manufacturers. At this point in time, manufacturers are unwilling to jeopardize market share for profits and are looking to direct consumers to more profitable sizes and wide aspect ratios (16:9).
Other than wide screens in 19" and 22" sizes, monitor prices have been increasing for standard 4:3 ratio products. The price gap offers an incentive to consumers to adopt the more profitable models. To date, OEM’s have yet to be greatly affected by the changing market dynamics because they have anticipated the changing market dynamics and locked themselves into long term contracts to guard against potential supply disruptions and price increases. The 15” and 17” sizes are in limited supply due to the impact of the changing market dynamics. Two 15" panels that are active in the open market are Samsung's LTM150XO and LG's panel LM150X8 as well Samsung's 17" panel, part number LTM170EU-131. The word on the street is that panel consumers are already looking to lock in additional quantities, indicating choppy waters ahead. Interestingly enough, street prices for 19" sizes are lower than the 17" sizes. This is due to manufacturers looking to push consumers to larger formats.
Notebook Panels
Driven by the transition of manufacturing capacity to wide aspect monitor panels, and an effort by manufacturers to strengthen prices for the upcoming busy season in August, notebook panel supply continues to tighten with 14.1" and 15.4" sizes. These sizes are becoming the most troublesome for OEM’s. Horizon has seen notebook panels increase $10 to $15 per panel over the past month. We expect to see notebook panels in severe shortage over the next several weeks, depending on the model and manufacturer. OEM’s are in negotiations with manufacturers to lock in volumes and prices over the next several months based on forecasts. If forecasts are off, and OEM’s experience an upside in demand, expect to see the open market pricing and activity to increase dramatically.
However, as detailed in the introductory paragraph above, it is still in question if demand has really outstripped supply.
Television
After a long downward trend, we are beginning to see lead times extending three to four weeks and prices are reversing their course. Manufacturers reportedly have been shifting capacity to Televisions in order to meet demand. We expect to see prices increase anywhere from $10 to $15 per panel over the next month depending on size, model and manufacturer. We have already seen AUO part numbers A201SN02 V5 and T315XW01 selling roughly around $310.00 - a $15.00 increase from last month.
Industrial Panels
The industrial market, which historically has not been nearly as volatile as other panel markets due to stable demand and sold at a 15% premium, has been turned upside down. Supply has not kept up with demand. This is being attributed to the unusually long Chinese New Year holiday and new product introductions into the marketplace. Manufacturers have tightened supply on existing products to encourage adoption rates of newly introduced models. The open market has yet to see severe price swings, but expect to see the market increase in price over the next several weeks. We have seen activity for Sharp's LQ series increase over the past week with strong demand for both the 12.1" LQ121S1 and 10.4" LQ104S1 models.
