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LCD Panel Makers Look to Rise in the Fall

Aug 21, 2008  •  Post A Comment

Liquid-crystal display panel makers are likely to boost earnings in the fourth quarter, according to a report released this week. That’s after lagging demand from China and an oversupply caused LCD panel prices to drop as much as 20% since the beginning of the year.
August will have been the third straight month prices for LCD panels larger than 10 diagonal inches have declined after a 6.9% price increase in May, electronics analyst iSuppli said. The U.S. economic downturn and May’s Sichuan earthquake in China slowed demand.
Additionally, manufacturers boosted supply by switching to more efficient production lines earlier this year, causing the price drop in LCD panels, which are used in components such as desktop computers in addition to high-definition television sets, according to the report. Such prices are approaching the manufacturers’ costs.
“Reacting to weak sales and declining profitability, panel suppliers began to slash their utilization rates starting in July,” Sweta Dash, director of LCD and projection research at iSuppli, said in a statement. “LCD TV and desktop PC monitor manufacturers also are starting to cut their prices in order to reduce inventories and boost end-user demand.”
Such supply cutbacks may allow LCD panel prices to rise as much as 3% next month, restoring profitability in time for the fourth quarter, according to iSuppli.
Falling panel prices are a key factor in projections that LCD prices will drop enough to make HDTVs affordable to a growing portion of the U.S. population. The average price of a 32-inch LCD panel has dropped about 10% to $300 this year and is projected to fall almost another 20% to less than $250 within the next year, NPD Group unit DisplaySearch said in June.
Earlier this month, DisplaySearch said TV makers during the second quarter boosted LCD panel orders by about 27% from a year earlier to about 25 million units. As a result, TV makers ordered about 4% more LCD panels than they needed during the first half of the year, creating an oversupply of about 2 million panels, according to David Hsieh, DisplaySearch’s VP of greater China.

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