Corning, the world’s leading maker of glass for LCD panel substrates, in late October announced that a power disruption at its facility in Taichung, Taiwan during the weekend of Oct. 18-19 had impacted a portion of its production.
The power disruption caused the shutdown of several of the facility’s glass melting tanks. Since it will take time to repair the tanks and bring them back up to full operation—possibly as long as two months—glass supply will be impacted, especially in Taiwan.
iSuppli expects Corning’s supply of glass to Taiwanese LCD makers to fall short of expected levels by 5 to 10 percent in the fourth quarter. The shortfall mainly will impact fifth-generation and higher fabs, which are used to make panels for notebook PCs, desktop PC monitors and 32-inch for LCD-TVs.
By the time Corning has restored full production at the Taichung facility, global glass supply will have fallen short of the expected level by less than 5 percent during the fourth quarter, iSuppli believes.
If this supply disruption had occurred during a time when panel inventory was low and production was increasing, it could have caused LCD availability to become constrained and prices to rise. However, with prices declining due to seasonal and market conditions, this isn’t expected to occur this time.
“Many panel suppliers were hoping that a glass shortage would mitigate the downward pressure on LCD prices,” said Sweta Dash, senior director, LCD research, for iSuppli. “However, there is no indication this is going to happen in late 2009.”
The large-sized LCD panel market has been in a state of oversupply since September due to a buildup of panel inventories, and sizable stockpiles of finished products among retailers, Dash observed.
Meanwhile, with electronics OEMs already having concluded most of their panel purchases for the holiday season, LCD sales have begun to decelerate, as is the normal pattern in the fourth quarter. These factors have spurred a decrease in large-sized LCD panel pricing that is expected continue throughout the fourth quarter. TV panel price reductions expected to persist in November, with a 3 percent decline, and
in December, with another 3 percent decrease.
“With the Corning production issue occurring amid a glut of supply and a decline in demand, average pricing for large-sized LCD panels will not rise in the fourth quarter, in fact is expected to decrease throughout the quarter,” Dash said.
“Furthermore, other glass suppliers such as Asahi and NEG are capable of ramping up production to compensate in part for Corning’s supply reduction. Corning also said it will accelerate the repair process and will leverage its own worldwide supply chain to deliver additional glass supplies to Taiwan, limiting the impact of the production disruption.”
Pricing for a product representative of market trends, the 32-inch WXGA LCD-TV panel is expected to average $196 in the fourth quarter, down 5.8 percent from $208 in the third quarter.
The figure presents quarter Average Selling Prices for 32-inch WXGA LCD-TV panels.
Source: iSuppli, Nov. 2009
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