The first quarter conventionally is when the LCD panel market has abundant supply. However, the February earthquake in southern Taiwan and Samsung Display (SDC) having problems with transitioning to a new manufacturing process resulted in some loss of the panel industry’s overall capacity during the period. Furthermore, panel makers gained confidence in the market as the efforts to consume excess TV panel inventories were more efficient than anticipated. In sum, the panel market in the first quarter experienced a much more moderate oversupply situation.
With regard to the second quarter, WitsView, a division of TrendForce finds that the six major panel makers have ramped up their production as effects of the earthquake in Taiwan and SDC’s manufacturing issues subsided. The bottoming out of the panel prices has also spurred the panel makers to step up their production. According to WitsView’s latest report on panel capacity, the large-size panel’s glut ratio (an index used to measure market oversupply) in the second quarter has risen to 5.5%, a significant increase from the first quarter’s 1.5%.
According to WitsView, Innolux and SDC have made an all-out effort to boost their panel production in the current quarter to compensate for the capacity losses they experienced in the prior period. At the same time, LG Display (LGD), AU Optronics (AUO), BOE Technology (BOE) and China Star Optoelectronics (CSOT) have all expanded their respective Gen-8.5 capacities, further increasing the panel supply. From the demand side, branded vendors working in various application markets have begun stocking up ahead of the peak season in the third quarter. Panel prices therefore have also started to stabilize, and some size segments are even seeing signs of rebound. Panel inventories have gradually returned to a healthy level during this period after the entire supply chain underwent an adjustment in the first quarter. As panel makers become more reluctant to produce unprofitable products, supply for some size segments have tightened and prices have rallied.
WitsView’s analysis for the coming third quarter indicates that the industry’s capacity expansion will be limited and the market will benefit from the effects of the peak season. The large-size panel’s glut ratio for the period is forecast to drop sharply to 0.6%. The market on the whole will reach an equilibrium and may even shift a bit towards undersupply. Prices for some size segments may continue to recover for two straight quarters. This unusual trend is attributed to market concerns about these size segments facing constraints in yield rates and panel makers allocating capacities away from them to make other products. On the whole, TV panels such as those sized 55 inches and 43 inches and under plus monitor panels sized 23 inches and under are expected to experience price rebound in the third quarter.