The price of large-size LCD panels, which has continued to decline slowly since April, has expanded rapidly since mid-July.
At the beginning of 2010, it was predicted that due to the recovery of demand for commercial warfare at the end of the year, the price of large-size LCD panels will bottom out in July and August and rebound before the end of the year. However, given the deterioration in inventory conditions and the accelerated price declines that began with strong panel purchases that continued into June, there is little hope of a rapid price increase. According to previous years' practice, it is the demand period for the commercial war at the end of the year. From the perspective of the whole industry this year, the inventory clearance of panels and TV sets will continue until the peak demand peak in October, so the view that “price will continue to fall†accounts for leading.
In terms of panel prices in July, IT (laptops and monitors) and TV sets were down by about 5% from June (Figure 1, Figure 2). However, due to the different timing of price negotiations, the final price of panels for different uses has further produced a few percentage points difference. The difference in final price is precisely the characteristic of the rapid decline in prices.
Figure 1: Price trend of LCD panel for IT (predicted value after August)
Figure 2: LCD panel price trend for 32-inch TVs (predicted after August)
The reasons for the rapid decline in panel prices are as follows. First, TV manufacturers are eager to clean up the inventory of panels and TV sets. In the context of the expected economic recovery, TV manufacturers have lowered their strong supply plans from the beginning of the first half of the year. Therefore, the excess feeling of the panel increases rapidly.
Second, TV manufacturers are asking panel makers to ensure cheaper panels for commercial wars at the end of the year. In order to increase the supply of TV sets, it is crucial for TV manufacturers to purchase panels with a cost of about 50% of the TV sales price at a more favorable price and ensure sufficient quantities.
Moreover, the demand for the LED backlight panel is tilted, and the CCFL (Cold Cathode Tube) backlight LCD panel is rapidly declining, which is one of the reasons for the rapid decline in panel prices. There is a view that with the increasing awareness of new devices such as LEDs, CCFL backlights of all sizes have gradually faded out of the ranks of best-selling products. The CCFL backlight LCD panel and the LED backlight LCD panel with a large price drop have opened up the price difference. However, it is expected that in the future, as the penetration rate increases and the inventory situation changes, the price of the LED backlight LCD panel will also be lowered by the CCFL backlight LCD panel.
Moreover, consumers expecting prices to fall further and holding money for purchase may also become an obstacle to the expansion of the panel.
On the other hand, among the panel makers, with Taiwan panel makers as the center, major manufacturers have begun to reduce the factory operating rate to control the supply (production adjustment). However, compared with Taiwanese and Japanese manufacturers, Korean manufacturers have lower manufacturing costs by more than 5%. Therefore, they are actively recommending price reductions to customers to maintain supply.
For large-scale production lines for TV panels that have not yet been completed, even for production adjustment measures, panel makers are adjusting the expansion speed of their large-scale production lines to increase the operating rate, rather than reducing the production of existing production lines. There is also a view that if the production adjustment measures for large-scale production lines are expanded, the excess will affect the production line of the sixth generation after the production of panels for panels and notebook panels.
TV demand in 2011 is expected to rise
In view of the above situation, our forecast of the price trend in the first half of 2011 reflecting the current situation change will be changed to the situation of “continuous decline to the end of the year†as discussed at the beginning of the article. If the price continues to fall according to this momentum, then the price trend will be based on the break-even point and the cash cost (the total cost of manufacturing + labor + overhead). It is expected that if the price declines faster (5%/month or more), then it may be temporarily lower than the cash cost, but the overall production adjustment will be effective in the future, and basically the cash cost level will become the bottom line.
The panel for notebook computers, which has a small space for falling from the cost of cash, is expected to soon start to fall. However, there is a need to pay attention to the risk of an increase in the decline for displays and TV panels that have room to fall.
It is expected that in the next few months, panel prices will change above and below the cost of cash. After that, TV manufacturers will evaluate the price of cheap panels, demand will recover, and prices will start to rise. From the seasonal factors of previous years, it is expected that the price will bottom out from March to April. In addition, as in 2010, TV manufacturers will take measures to ensure panel supply as soon as possible. From the end of 2010 to the beginning of 2011, prices are likely. There will be a rebound.
TV manufacturers will likely adopt these low-cost purchase panels to reduce the sales price of TV sets. And look forward to the demand for TV in 2011 will be high.
The price changes in the second half of 2010 will be determined based on the strength of the decline in the cash cost level and the inventory adjustment of the panel manufacturers' production adjustment scale.
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