By David Hsieh, Vice President, Greater China Market, DisplaySearch
Some panel makers have raised LCD monitor panel prices for January. Panel suppliers and their OEM and brand customers are agreeing to increase the panel price of the 19” Wide and 18.5” Wide LCD monitor panels by $3-5. Meanwhile, there are many reports of tight supply of 22” wide LCD monitor panels.
Notebook and LCD TV panel prices are expected to be flat in January, stopping the trend of falling prices seen for the past six months. The stabilization of panel prices is not because of a surge in demand, but rather due to several reasons:
- Panel makers are holding capacity utilization to low levels, and some plan to cut production further in January.
- Panel makers are rejecting some orders because panel prices are lower than their cash costs. This is what I call BTTO (Build To Tolerable Orders)http://www.displaysearchblog.com/2008/12/small-price-bump-in-first-half-2009/
- Due to reductions in orders over the past six months, OEMs and brands have low inventories, and for some sizes (such as 19” Wide monitor panels) they have some shortages. These customers are giving “rush” orders to the panel makers.
- The supply chain disruption over the past several months has led to some component suppliers retreating from the market, which means that panel makers are unable to get materials for these rush orders.
- To cope with panel prices below their cash costs and decreased utilization, many panel makers have asked employees to take unpaid leave/vacation to reduce overhead costs, so when rush orders come, they cannot begin production immediately. This represents a short-term gap between supply and demand.
- Panel makers are expecting the panel prices to rebound, at least back to the cash cost level to prevent further bleeding which jeopardizes their survival. They are telling customers, “if you want to have the order, you have to accept the price increase, or I cannot deliver anything.”
Increases in panel prices are needed to maintain the viability of panel makers, particularly in Taiwan. Many panel makers are targeting panel prices to return to cash cost. Since there are not any significant increases in demand, it is not clear if price increases are sustainable. But for the panel makers this seems like the first ray of hope in a long time.
