LCD monthly desktop monitor production rate highest since mid-2008

AUSTIN, USA: January LCD monitor production for top PC and monitor brands — about 85 percent of the market — was 12.5 million, the highest level in more than a year, as noted in the newly announced DisplaySearch Monthly Desktop Monitor Brand and OEM Production Report.

Additionally, near-term production build-plans show that March could be the highest monthly production of LCD monitors on record, reaching over 12.9 million.

“In today’s volatile PC market, OEM and brand production totals are a leading indicators as to what the market may see in the near term, including pricing and supplies,” notes Chris Connery, Vice President of Personal Computer Displays at DisplaySearch.

Fig. 1: Top 12 Monitor Brand Production (Jan 2009-Jan 2010) and Production Plans (Mar-Apr 2010)Source: DisplaySearch Monthly Desktop Monitor Brand and OEM Production Report.

While monthly production rates like these have not been seen since April 2008, prior to the global financial crisis, it is too early to attribute the higher production levels to an increase in end-market demand. “Just because you build it, does not mean that they will come,” notes Connery. “Many other factors need to be considered alongside of actual production to get a true sense of the market.”

These other factors include:
* Continued strong demand for 19-24” LCD TV panels, which affect the supply of similarly-sized PC displays and can cause pricing for these panels to rise amid shortages.
* The threat of increased panel pricing has historically caused monitor companies to pull-in or double-book orders to receive allocation prior to price hikes. Such a pull-in of production without increased end-market demand can set the stage for high inventories.
* In China, which has become one of the largest consuming regions for monitors, end-market demand for LCD monitors is not very strong in Q1’10, but production requests from the major players in the China market are still strong, with many looking to stock up for the Chinese New Year.
* The growing dominance of notebook PCs, which outpaced desktop PC shipments for the first time in 2009, calls into question where the increased demand for external, larger-size displays is coming from. Surveys show that consumers (those driving the PC trends towards mobile computing) are far less likely to use a monitor with their notebook than a professional user in a work environment.

The use of LCD technology in desktop monitor displays and in all-in-one desktop PCs means this is still one of the top markets for large-area LCDs. Historically the supply chain for these products could be managed on a quarterly basis.

However, the fast-paced nature of the market and its inter-dependence on other markets such as notebook PCs and TVs, which compete for the same panel production, now requires that brands and their OEM production partners track production on a monthly basis. Otherwise, they are caught short on supply or end up spending too much on panels in a supply-constrained situation.