Falling TV-panel Prices to Affect Panel Suppliers' Margins: WitsView

Supply surplus has led to continued price falls of thin film transistor-liquid crystal display (TFT-LCD) TV panels in March, including the stiffest decline range of US$5 to US$8 for over-46-inch products; while prices of information technology (IT)-application panels remained stable in February, according to WitsView Technology Corp.

The falling TV-panel prices are expected to affect the profitability of major Taiwanese TFT-LCD panel suppliers, especially AU Optronics Corp. (AUO) and Innolux Display Corp.

C.H. Liu, research manger at WitsView, pointed out that less workdays due to the Chinese Lunar New Year holidays and shortages of labor and materials in China led to lower demand from Chinese vendors. As  a result, the equipment utilization ratios of AUO and Innolux, major TV-panel suppliers to Chinese TV brands, fell by 5% to 10% month-on-month (MoM) in February. However, the two Taiwanese panel suppliers' utilization ratios are expected to rise 5% to 10% MoM in March, thanks to recovering demand from China as vendors prepare for sales peak in early May, and rush orders from customers in Europe and the U.S.

Though demand might recover in March, Liu said, the overall excess supply is expected to continue to drive down TV-panel prices and panel suppliers' profit margins in March. The average price for 32- to 42-inch TV panels, he predicted, are expected to drop by US$1 to US$5 in the month.

In addition to excess supply, Liu explained, panel suppliers' vigorous efforts in pushing new sizes of TV-panels ranging from 46 and 55 inches also led to price falls.

WitsView said that the overall IT-panel price is expected to remain stable, except that prices of 27-inch monitor panels may continue sliding. Notebook PC panel prices are also stable, except that of 11.6-inch products might hike about US$0.1 due to supply tension.

Liu added that currently downstream demand for TV panels is stable and the parts inventory level at system makers is reasonable, but vendors and system makers dare not restock with panel prices still falling.