LCD Panel Prices Drop 15 Percent in May -- Still Not Enough (AUO, GLW)

 |  Includes: AUO, GLW
by: William Trent, CFA

15% -- I’d like to see them cut their costs faster than that.

Here’s the rundown:

DigiTimes ran two articles last week which demonstrate that the sales glut surrounding LCD panels is starting to contribute to lower sales prices. In the first article, Taiwan market: 32-inch LCD TV prices to fall to new low, DigiTimes reported that:

With Acer slashing the price on a 32-inch LCD TV in May, Taiwan-based home-appliance maker Proton recently also lowered the price on one of its 32-inch models by NT$5,000 (US$153) to NT$27,900 (US$859) amid falling LCD panel prices, according to the Chinese-language Commercial Times.

The second of the two articles, LCD Panel Makers Feel Bite added:

With large-size panel ASPs (average selling price) continuing to fall, consolidated sales from most major Taiwan-based panel makers fell 7-20% sequentially in May, according to the companies.

Quanta Display was the only major Taiwan maker to report growth in both sales and shipments of large-size panels during the period, while AU Optronics (NYSE:AUO), Chi Mei Optoelectronics, Chunghwa Picture Tubes and HannStar Display all had falling revenues.

Swelling inventories and disappointing demand from all applications caused prices for large-size panels to plunge in the first half of 2006, with no relief expected until the second half, according to iSuppli.

GLW-AUO 1-yr comparison:

GLW-AUO 1-yr comparison