The Panel Shortage Is Here
In our previous update, Horizon reported that market dynamics and OEM buying patterns indicated a shift towards an allocated market. Over the past few weeks we have seen a dramatic increase in OEM activity in the open market across all types of panels. We expect to see OEMs wrestle with allocation issues and price increases well into the fall.
The combination of manufacturers realigning manufacturing capacity and the unanticipated double digit growth in personal computer shipments has created a perfect storm scenario, resulting in an allocated market. With the majority of manufacturers capacities dedicated to television applications and a reported fifty percent year over year growth in notebooks, the notebook sector is seeing the most severe shortages.
Notebook Panels
Manufacturers across the board are expected to push prices upward by five to seven percent in August for tier one customers. Tier two and three customers may see prices increase up to ten percent. However, their primary concern should not be about price, but about securing allocation.
With manufacturers pushing consumers towards the wider 16:9 aspect ratio it has created an acute shortage for 4:3 aspect ratio product, with particularly strong open market demand for 14.1” sizes. We are also seeing a demand for wide panels in 13.3”, 14.1” and 15.4” sizes. Two panels in very high demand are AU panels B154EW08 V.1 and B150XG02 V.4/V.56. We expect to see a tight market shifting well into the fall.
Monitor Panels
With monitor market demands shrinking, due to consumers increased taste for notebooks, monitor panels are not under as much pressure as notebook panels. However, there are shortages in 15”, 17” and 19” sizes in the 4:3 aspect ratio which is expected to carry into September as manufacturers shift capacity to notebook panels and 16:9 aspect monitor panels.
Monitor panel consumers need to watch very closely as we approach September as OEMs will receive the last of their fall allocation for 2007. If there are delays or upsides, and OEMs turn to the open market to fill the gaps, prices will move up very quickly. However, after September, the market is expected to slow dramatically as manufacturers have met their year-end obligations.
Industrial panels
Despite the traditional stable supply chain in the industrial market, consumers will need to carefully watch their distribution channel. Distributors do not carry large volumes of industrial panels in stock. Instead, they prefer to order from manufacturers against customer schedules. Inevitably, with industrial panels competing for tight manufacturing capacity, we have already seen prices increase in July from five to ten dollars per panel and lead times stretching. Two panels that have been very active in the open market are Sharp panels LQ104V1DG21 and LQ084S3DG01.
Television Panels
With the majority of production supporting the television market, we have
seen limited open market activity in comparison to notebook panels. The only shortages of significance are for 32” sizes. The 40”, 42” and 46” seem to currently
be supported. However, we are hearing that manufacturers are limiting additional OEM orders to thousand piece quantities. We expect to see a tight market well into 2008.
