After increasing in April and May, prices for large-sized LCD panels are set to enjoy another rise in June as demand remains strong—particularly from the television market, according to iSuppli Corp.
Pricing for 37-inch WXGA and HDTV panels are expected to rise by 0.8 percent in June, following a 0.9 percent rise in May. Prices for 40- to 42-inch WXGA and HDTV LCD-TV panels are expected to increase by 1.4 percent in June, matching their increase in May. Pricing for 37-inch HDTV panels rose by 0.8 percent in June, compared to a 0.9 percent increase in May. For the 32-inch WXGA panels, prices in June are expected to increase another 3 to 5 percent.
While the price increases in June will be continue into the third quarter—as television demand rises during the start of the all-important holiday selling season.
To accommodate the increases in demand, panel suppliers plan to increase their LCD fab utilization rates aggressively. This may spur a shortage of the key material used to make LCDs: glass. Glass suppliers are remaining conservative on ramping up production, although their inventory ran out in May. Some panel suppliers are already reporting glass shortages. Glass from fifth- and sixth-generation fabs is expected to be in short supply, hampering panel output in the third quarter of 2009, iSuppli believes.
TV on Demand
The television market in China continued to spur growth in panel demand, helping to support the panel price increases in May. Channel inventory remains healthy and at low levels, and Chinese panel purchasers continue to report shortages in supply.
While there are some slowdowns in demand happening in both the U.S. and European markets, average LCD-TV system prices were still increasing in May due to new model launches and the arrival of television models with additional features. That said, television sales are slowing slightly in both of these regions, but the leading brands have started to carry out their promotional campaigns starting in June.
With prices on the rise for 40/42 and larger panels, suppliers are aiming for a return to cash-cost or even total-cost levels. Pricing for 46/47-inch panels also is expected to rebound from June. Demand for large-screen TVs will receive a boost from China’s new urban stimulus program.
Taking a Loss
Despite the TV demand and increase in prices, all three panel applications—LCD-TVs, monitors and notebooks—remain far below total cost. The majority of television panel pricing is above cash cost, certain monitor panel sizes are reaching cash cost and notebook panel pricing were still below cash costs in May. To break even with cash costs, panel suppliers are quoting aggressive price hikes for all three applications.
Read More About LCD Panel Pricing, Large-LCD Panel Market Tightened in May with Continued TV Panel Demand