Large-size LCD panel November revenues fall to lowest in more than 2 years

In November 2008 shipments of large-size TFT LCD panels reached the lowest level since May 2007, according to the DisplaySearch. Shipments were 28.5 million units, down 21% on month and 25% on year. November revenues for large-size TFT LCD panels fell to US$3.8 billion, down 24% on month and 50% on year, the lowest level since July 2006.

DisplaySearch also found that panel demand has weakened significantly in all three of the major TFT LCD applications-notebooks, monitors and TVs-and panel suppliers have reduced capacity utilization.

Notebook panel shipments were 8.5 million units, down 25% on month and 23% on year, which is the lowest level since May 2007. Monitor panel shipments were 10.9 million units, down 22% on month and 33% on year, which is the lowest level since June 2006. TV panel shipments were eight million units, down 17% on month and 16% one, which is the lowest since September 2007.

A combination of slow demand, the tendency of leading brands to favor internal sources of supply, and depreciation of the Korean won has disadvantaged Taiwanese panel suppliers, leading to loss of market share. Korean suppliers had more than half the market share in November, a dramatic increase over just two months earlier.

In November, LG Display was the leader in units shipped, with 26% market share, while Samsung Electronics led in area shipments with 29.4%. Both shares are the highest level for the leading suppliers in four years.

In terms of application market share, LG Display led in notebook with 33.3% unit share, followed by Samsung at 28.2% and AU Optronics (AUO) at 21.6%. Samsung led in monitor with 22.2% unit share, followed by LG Display at 21.9% and AUO at 15.1%. Samsung led in the TV segment with 27.9% unit share, followed by LG Display at 26.2% and Sharp at 17%.

Weak demand is also impacting shipments of small- to medium-size TFT LCDs. November shipments from Korean and Taiwanese suppliers fell to 41.3 million units, down 44% on month and 39% on year, which is the lowest level since May 2007. Small- to medium-size TFT LCD revenues for Taiwanese and Korean suppliers fell to US$337 million, down 42% on month and 51% on year, which is the lowest level since April 2007.

According to David Hsieh, vice president of DisplaySearch, "The TFT LCD industry is going through the hardest time in a decade, as shipments and revenues dramatically decline. To cope with the weak demand, capacity utilization for Taiwanese panel manufacturers is below 60%, Korean manufacturers are reducing utilization to less than 80%, and Japanese manufacturers are re-adjusting fab allocations."

Hsieh said currently, most panel prices are below cash cost, and some lower than the BOM (bill of materials) cost. However, the biggest challenge may be in the first quarter of 2009, since downstream demand is unclear as long as panel prices continue to fall, he added.

Hsieh concluded, "The industry will need to take additional steps to reduce capacity utilization, since falling panel prices are not stimulating demand under the current economic conditions. Continuing to reduce panel prices will cause continued pain for the whole supply chain, including panel makers, materials makers and set makers."