EL SEGUNDO, CA – Prices for LCD monitor panels are rising, despite the weak economic situation and cuts in consumer spending, according to iSuppli Corp.

“Average pricing for most of monitor panels and small-sized television panels increased in a range from $2 to $3 in March compared to February, mostly due to an influx of rush orders coming from the domestic Chinese market, driven by the impact of China’s rural consumer stimulus program,” said Sweta Dash, director of LCD research for the firm.
 
“The price increase was also the result of rising orders from brands and retailers. These brand and retail orders mostly stem from demand for inventory replenishment because channels have kept their stockpiles at lower-than-normal levels since the end of 2008. With many panel prices for monitors having been drastically slashed to less than cash-cost levels, panel buyers in February started purchasing in droves to build a supply of cheap panels.”
 
However, monitor supply is being hampered by component shortages that won’t be resolved by April, Dash noted. As a result, rush orders will carry over to April and support another hike, boosting panel pricing by another $1 to $3.
 
While rising prices and increased demand are healthy signs for the LCD monitor panel market, iSuppli cannot declare monitor end-market demand is headed for a sustainable recovery at this point because of several factors.
 
“In the absence of a strong rebound in end-market demand, rush orders are not likely to be sustained in May with component shortages being resolved by then, and panel demand is most likely to remain restrained at that time,” Dash said.
 
“Another factor stems from the fact that panel suppliers are rushing to increase their utilization rates. In general, Taiwanese LCD suppliers have been reluctant to boost production rapidly, as they continue to sell panels below their cash costs and remain concerned about demand levels during the period after May. Nevertheless, Taiwanese suppliers are running their Gen 5/5.5 fabs at more than 60 to 80%. In comparison, Korean suppliers are increasing their panel output aggressively, boosting the utilization of their fifth-generation fabs to more than 90%.”
 
Both Taiwanese and Korean suppliers are increasing their sixth-generation fab capacity because of strong demand for 16 x 9 monitor panels and small-sized TVs. For Gen 7/7.5 and above, suppliers in Taiwan continue to run at a low 50% utilization rate, while Korean suppliers are returning to high loading rates.
 
“In light of these developments, iSuppli believes the monitor panel segment still has a long way to go before pulling itself completely out of the doldrums of the current global economic crisis that is hitting all segments of the electronics value chain,” Dash said.

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