LCD panel inventory returns to healthy prices will soon stabilize

The inventory situation of panel factories and sales channels is a key factor affecting the supply and demand status of LCD panels. DisplaySearch's newly published MarketWise-LCD Industry Dynamics report shows that panel merchants' inventory has returned to benign levels in December 2010, ending the inventory inventory situation in the previous two months.

On average, the inventory of LCD panels, namely the finished module inventory of panel makers, has dropped to the level that panel makers can regulate. The turnover period of TV panel inventory is 7-8 days, the turnover period of display panel inventory is 6-7 days, and the turnover period of notebook panel inventory is 5-7 days. In addition, due to the lack of inventory pressure, panel prices, especially LCD TV panel prices, have begun to stabilize.

The inventory of panel makers has returned to a healthy level, but brand owners are still facing the pressure of higher stocks. The DisplaySearch study found that supply chain stocks for TV, monitor, and notebook brands were between intermediate levels (4-5 weeks) and high water levels (more than 6 weeks). This also explains the plan of the brand makers to suppress production in the first quarter of 2011.

In the United States, sales in the retail market were active in the fourth quarter of 2010, and CCFL backlights were the main selling products. However, the market did not ease the inventory pressure of all brands. Most brands still face the high inventory problem of LED-backlit LCD TV modules. Therefore, we estimate that in the first quarter of 2011, brand owners will step up sales of LED-backlit LCD TVs before the launch of the new module in March. In China, as of the end of December, good sales during the holiday period effectively reduced inventory pressure. We estimate that LCD TV inventory will be reduced to medium level by the end of December.

According to Deborah Yang, research director of DisplaySearch, “Although the active market has eased the pressure on inventory, because of the strong productivity in the fourth quarter of 2010, we estimate that Chinese TV brands still hold additional inventory at the end of 2010. Part of this will be put on the Chinese New Year holiday market. In Europe, brand owners will still worry about inventory in the first quarter of 2011."

Although the inventory of LCD monitors was at a medium level before November, the sales of the major LCD brand makers focused on the Chinese market were sluggish, resulting in an increase in inventory at the end of 2010.

MarketWise-LCD Industry Dynamics report presents another summary of LCD industry trends:

Panelists plan to reduce shipments of large-size panels in January, which will drop 2% year-on-year, and TV panel shipments will drop the most, dropping 9% per month. However, due to the increase in demand in February, shipments of notebooks and tablet PCs will increase by 5%. The growth is also to cater to the new module that will be launched in the first quarter of 2011, and the 9.7-inch tablet PC with rapid shipment growth.

The total production volume of the top 16 LCD TV brands was as follows: it was 18.4 million in October, 18.3 million in November, 15.9 million in December, and 11.71 million in January 2011. 13.8 million in March and 15.4 million in March.

In December 2010, 60% of Samsung LCD TV panels shipped to Samsung and Sony, and 45% of the Lejin display panels were shipped to Lucky Electronics and Vizio (Taiwan Ruixuan). Samsung TV has become the largest customer of New Chi Mei.

China's LCD TV panel imports are expected to decline from 15 million in the fourth quarter of 2010 to 13 million in the first quarter of 2011. During the fourth quarter of 2010 and the first quarter of 2011, we estimate that Le Jinyin and Sharp will win some market share from New Chi Mei.

The output of the first five notebook OEMs will decrease by 2% in January to 13.7 million units. Production in February will be reduced to 11.2 million units, and production will rebound sharply in March to 15 million units.