Unit production of LCD monitors exceeded end-user consumption by 11 percent in the first half of 2010. The inventory accumulations triggered order cutbacks at the factory level in July and August, which is helping to send monitor panel prices plummeting in the third quarter of 2010.
Slower-than-expected sales on the consumer side in July and August compounded the problem, particularly for those vendors already carrying heavy inventory loads.
“The first half of 2010 saw a growing disconnect between LCD monitor panel supply, factory-set production and end-user sales in the global desktop PC market,” said Rhoda Alexander, director of monitors for iSuppli. “While panel shipments and set manufacturing rose sequentially in the first and second quarters, branded shipments and end-user sales declined. Such developments tipped the market into a state of oversupply, particularly on the consumer side of the business.”
Despite the inventory concerns, end-demand for monitors remained solid in the second quarter. Preliminary results for the second quarter indicate that end-user sales came close to the iSuppli forecast at 41.3 million units, down 1.6 percent from the first quarter, but up 8.4 percent from the same period in 2009.
The figure presents iSuppli’s estimate of quarterly worldwide shipments for manufactured LCD monitors, branded shipments and end-user sales for the second half of 2009 and first half of 2010. Approximately 1.5 million to 2 million units per quarter of the LCD monitor panel production actually go to television sets, rather than monitors.
Source: iSuppli, USA.Glut lessons
“A more extreme inventory glut occurred two years ago,” Alexander said. “However, the good news is that unlike in mid 2008, monitor vendors and those in the channel this year have reacted much faster to the rise in inventories. And unlike late 2008, end demand is still increasing.”
The end-user consumption outlook for monitors in 2010 remains positive at the unit level, with expected year-on-year growth of 6 percent or more. However, revenue growth will be significantly lower, as vendors capitalize on the lower panel costs with aggressive holiday sale prices on finished sets.
iSuppli predicts that a fourth-quarter resurgence in consumer monitor demand will occur with the coming price cuts, particularly in the 23-inch and larger sizes, where the declines will be the most dramatic. Slim industrial designs incorporating LED backlights will offer a premium opportunity on the consumer side as well for those vendors ready with new products for the all-important holiday season.
Nonetheless, the mobile migration is taking a toll on the consumer side of the monitor business, and vendors face continuing challenges from that sector as they try to improve monitor attach rates to mobile devices.
Fueling demand
Demand from the corporate sector has been strong throughout 2010, with vendors and channel participants continuing to report healthy order activity in that sector. Much of this demand is for SXGA and 16-by-10 format products, which have benefitted the vendors still offering these monitors for business customers.
Vendors report growing corporate interest in upcoming products using LED backlights, which should help to fuel year-end demand, particularly in the Europe/Middle East/Africa region, iSuppli’s electronic display research indicates.
With panel vendors sharply reducing utilization rates in an effort to stabilize pricing, and end-user demand on track to increase in the fourth quarter, monitor vendors may yet face panel shortages again before the end of the year, particularly in the SXGA and the 16 by 10 formats, the products most seriously impacted by the recent utilization cutbacks.
The economy remains a wild card, however, with vendors and users clinging to positive growth indicators while hoping to avoid a double-dip recession.
Source: iSuppli, USA.
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