LCD Researchers Still Optimistic About Second Half

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Includes: GLW, LPL, MC-OLD, SHCAY, SNE
by: William Trent, CFA
DigiTimes conducted an interview with Sweta Dash of industry research firm iSupply, which is still optimistic that prices for LCD panels will rebound in the second half of 2006.

Prices for 17- and 19-inch monitor panel prices have fallen significantly. Although prices for the two segments are not likely to stop dropping in July, the prices will eventually stabilize and even pick up by US$1-2 in August. In fact, we remain optimistic about demand in the second half. The panel industry will swing from an oversupply ratio of 6% in the second quarter to a balance point in the third quarter, with a tight supply ratio of 1% to occur in the fourth quarter.

In fact, this year will follow the same pattern as those in previous years. The large-size panel industry always worsens when demand is weak, but the industry will eventually bottom-out. After that, demand always picks up because of already-significant price drops and reduction of production.

For TV panel prices, however, we expect to see prices for the segment to keep falling throughout 2006.

The seasonal slowdown story doesn’t hold much water, because supposedly the Olympics and World Cup were going to drive unseasonably high demand for flat panel televisions this year. Hopes now rest on the fourth quarter holiday season, and fingers are crossed that the US consumer will carry the day.

That has been a safe bet in recent years. But someday it won’t. We have no idea whether this year will see “someday” become "today" so we continue to be cautious as we wait for panel inventories to correct.

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