Supply glut means LCD panel prices will fall

Staff -- Purchasing, 10/20/2005

Weaker than expected demand will mean that prices for large-size liquid crystal display (LCD) panels used in computer monitors and televisions will fall for the rest of the year.

While demand for large-sized thin film transistor (TFT) LCD displays were strong in the second quarter, demand has weakened in the third quarter creating a glut, says researcher iSuppli.

The global supply of large-sized TFT-LCD displays exceeded demand by 5% in the third quarter and the gap will grow to 6.2% in the fourth quarter, says iSuppli.

The oversupply will cause pricing for LCD-TVs and desktop PC monitor panels to decline in the coming months. For instance, the price of a 17-in. monitor panel was $171 in September. That will decline to $157 in December, says Sweta Dash, an analyst for iSuppli.

"The price had been going up since February," she says.

She says the price of a 40-52 in. panel for LCD TVs will decline from about $1,078 in September to $900 in December.

The weaker demand is somewhat of a surprise because demand in the second quarter from the first quarter increased 16% to 48.4 million units.

The LCD-TV segment grew the fastest, with panel shipments rising to 5.4 million units, up 26% from the first quarter. This resulted in shipments of 9.6 million LCD-TVs in the first half alone.

Many of these panels were shipped to value-brand and white-box television manufacturers, which were purchasing in anticipation of strong holiday demand in the fourth quarter.

Rising energy prices, lower consumer confidence and slower economic growth is apparently slowing growth for LCD panels.