Flat Panel Display Makers Face Ongoing Weakness

|
 |  Includes: AUO, GLW, GNSS, LPL, MC-OLD, MMM, NVDA, SIEGY, SNE
by: Eric Savitz

A “major slowdown” in demand for large-size LCD displays in December triggered a faster-than-expected fall in panel pricing in both December and January, according to the research firm iSuppli.

In a research note today, iSuppli said “price erosion is expected to continue through the first quarter because of the seasonally slow market conditions.” The firm said monitor and notebook panel prices may stabilize by the end of the second quarter, but that television panel prices, “will continue to decline through the second quarter due to increased production from newer-generation LCD fabs.”

Sweta Dash, director of LCD and projection research at iSuppli, noted that the price declines came despite a drop in panel fab utilization rates at many suppliers to 80%-85% in December and January, down from 95% and higher in November.

LCD monitor panel prices fell 4%-6% in January from December; notebook panels fell 2%-4%; LCD-TV panels fell 3%-8%. The firm says the rate of erosion should diminish in February due to reduced supply, in part the result of the Chinese New Year holidays.

There is no relief ahead for consumer electronics retailers hoping for a slowdown in the fall of flat-panel TV pricing. “Slow seasonal sales and oversupply in the first quarter of 2007 will push prices to less than the $300 level for 32-inch LCD TV panels in March, which is below the manufacturing cost level,” iSuppli says. “Many suppliers are continuing to cut their utilization rates at fabs that are producing these types of panels in order to stave off any further rapid price declines.”

See: More coverage of Flat Panel Display stocks.