Earthquake causes minor disruption in LCD glass supply

EL SEGUNDO, USA: An earthquake in Japan this month at a plant operated by Corning Inc. will slightly exacerbate an existing shortage of glass for LCDs, but the impact is not likely to have a major impact on panel supply during the holiday season, according to iSuppli Corp.

“Because of the earthquake, Corning has suspended production at its glass manufacturing facility in Shizuoka, Japan,” said Sweta Dash, senior director of LCD research for iSuppli.

“This supply interruption will disrupt LCD production at Sharp. Corp.’s eighth-generation fab, which supplies panels for 32-inch and 40-inch as well as larger LCD-TVs. However, with glass suppliers increasing their output to meet rising demand for Christmas, the overall demand for this key raw material is expected to exceed demand by the start of the fourth quarter.”

All other LCD glass facilities operated by Corning and other glass manufacturers worldwide continue to operate normally. Corning expects to restore its Shizuoka facility to full production within a few months.

LCD glass supply has been in a state of oversupply since the second half of 2008.

After suffering a supply glut of 13 percent in the fourth quarter of 2008, conditions shifted dramatically in the first quarter of 2009 as panel makers idled many of their production lines in order to adjust to reduced demand. This caused demand to exceed supply by 0.5 percent in the first quarter.

The undersupply rose to 1 percent in the second quarter primarily due to strong panel demand, especially from China’s television market. The shortage is expected to intensify in the third quarter to a 2 percent undersupply, before reversing to a 4 percent oversupply in the fourth quarter as panel demand cools following the holiday purchasing season.

Demand-driven shortfall
While the glass shortage has contributed to tight availability of large-sized LCD panels, the major factor behind the short supply is strong demand.

“In a positive sign for the global large-sized LCD market, panels are in short supply mainly due to strong demand from television and PC makers that are building supply in advance of the Christmas selling season,” Dash said. “This indicates that computer, monitor and LCD-TV makers are anticipating strong demand during the upcoming holiday season.”

iSuppli defines large-sized panels as those having a diagonal dimension of 10 inches or more. Aggravating the shortage, LCD panel buyers are engaging in overbooking, i.e., placing more orders than they really need, in order to secure supply in the face of limited availability and despite some increase in inventories among channels and buyers.

Taiwanese troubles
Beyond the direct impact on Sharp, some Taiwanese suppliers are concerned that their supplies may be impacted if glass shipments are diverted to Japan.

The Taiwanese suppliers already were bearing the brunt of the glass shortage at their older fifth- and sixth-generation LCD fabs. Such fabs specialize in producing smaller displays used in products like desktop monitors, notebook PCs and smaller-sized televisions.

Glass supplies get clearer
“Fortunately for the global large-sized LCD panel industry, the Corning supply disruption is coming at a time when most of the idled glass tanks in the world are starting to come back to full production mode,” Dash said. “That will help to reduce the total impact on LCD panel supply.”

Previously idled glass tanks are expected to return to normal production levels by the end of August. In the fourth quarter, most of the glass issues are expected to be resolved, allowing panel suppliers to operate at full production levels.

Because of this, many panel suppliers are already planning expansions of their newer eighth- , 8.5- and tenth-generation fabs in the fourth quarter.

Prices affecting profitability?
The combination of strong demand and short supply caused large-sized panel prices to rise sharply during July. For example, the price of a representative large-sized LCD, the 32-inch WXGA television panel, climbed 10.4 percent in July. The price increase moderated to a 5.8 percent rise in August.

The figure presents average global pricing for 32-inch WXGA LCD panels for the period of October 2008 through August 2009.

iSuppli: Global Average Pricing for 32-inch WXGA LCD TV Panels (Pricing in US Dollars)Source: iSuppli, Aug. 2009

“The increase in pricing is certainly welcome news for panel suppliers especially after facing several quarters of pricing below manufacturing costs,” Dash said. “However, at this point it comes as bad news for branded vendors of televisions, desktop PC monitors and notebooks, as their profitability is being squeezed by rising panel prices.”

iSuppli already is noting that monitor and TV system makers are suffering losses in profitability due to these hikes. As a result, some panel buyers have become conservative about building their panel inventories and are resisting accepting any sharp price increases. This is causing price hikes to moderate somewhat in August.

“iSuppli anticipates a downward price correction in the fourth quarter as LCD panels return to a state of oversupply,” Dash said. “This correction could be of a greater magnitude than the industry expects.”

LCD market rebounds in Q2, recovery set for H2

EL SEGUNDO, USA: After declining for the previous nine months, global shipments of large-sized LCD panels rose sequentially by 41.4 percent in the second quarter compared to the first due to higher pricing and healthy demand, according to iSuppli Corp.

The large-sized LCD panel market rose to 129.7 million units in the second quarter, up from 91.7 million in the first quarter. This follows sequential declines of 2.3 percent in the third quarter, of 18.6 percent in the fourth quarter of 2008 and 2 percent in the first quarter of 2008.

iSuppli defines large-sized LCD panels as those having a diagonal dimension of 10-inches or larger.

“On the demand side, strong sales in China spurred by a government stimulus program propped up sales in the first half,” said Sweta Dash, senior director for LCD research at iSuppli. “Meanwhile, notebook panel demand recovered in the second quarter and global LCD-TV sales remained strong.”

Low inventories throughout the supply chain, combined with the severe cut in LCD fab utilization rates and production, pushed the market to tight supply beginning in the first quarter of 2009. As a result, panel prices have been increasing since the beginning of 2009, especially for monitor and TV panels, although these prices were still below manufacturers’ costs.

However, while shipments rose on a sequential basis in the second quarter, the market actually declined in the first half compared to the same period in 2008.

“A full recovery in the large-sized LCD panel market is expected in the second half of 2009, when strong panel demand combined with higher prices will bring the market back to profitability and revenue growth,” Dash said.

Global shipments of large-sized LCD panels in the third quarter of 2009 will rise by a robust 28.9 percent compared to the same period in 2008. Shipments in the fourth quarter will growth by an even more impressive 57.1 percent from the same quarter in 2008.

For the full year of 2009, large-sized LCD panel shipments will rise to 516.7 million units, up 18.6 percent from 435.7 million units in 2008.

However, large-sized LCD panel revenue for all of 2009 is still expected to decline by 8 percent compared to 2008 due to the below-cost pricing throughout the first half of 2009. Revenue in 2009 will amount to $67.2 billion, down from $73.1 billion in 2008.

The figure presents iSuppli’s forecast of quarterly, global shipments for large-sized LCD panels.Source: iSuppli, July 2009

Healthy inventories
Large-sized panel inventory remained at low to normal levels in the second quarter. Inventory is expected to remain healthy until the third quarter.

Panel inventory is expected to remain low, given that panel suppliers worried about overbooking will be controlling panel shipments to prevent inventory from building up at buyers. But panel buyers are starting to pull in orders in preparation for expected tight supply in the third quarter of 2009.

China’s strong LCD-TV growth
The Chinese government’s rural subsidies program has increased TV demand in China. Now that the program has been extended to nine cities, growth is expected to continue through future quarters.

Television panel demand, especially from domestic brands, is expected to be strong in the third quarter to support strong growth expectations.

Branded TV manufacturers are beginning to offer discounts on new models in the United States, especially sets based on LED backlights and products with higher frame rates such as 120Hz and 240Hz.

More aggressive television set pricing, combined with stabilization in the global economy, will drive further demand in the second half of 2009. Television panel demand, excluding monitor panels used for TVs, is expected to reach 130 million units by the end of 2009, up 28 percent from 2008.

Notebook panel demand recovered in the second quarter after a slowdown in the first due to the introduction of notebook product based on Intel Corp.’s Consumer Ultra Low Voltage (CULV) featuring a thinner form factor, 16:9 format panels and LED backlight.

Large-area LED backlit LCD panel shipments pass 10mn units in Q1’09

AUSTIN, TEXAS: LED backlights are growing rapidly in large-area (10”+) TFT LCD displays. Panels with LED backlights reached 10.6 million units in Q1’09, up 63 percent Q/Q and 780 percent Y/Y, according to the latest DisplaySearch Quarterly LED Backlight Panel Shipment & Forecast Report.

According to the shipment plans of large-area TFT LCD makers, LED backlight panel shipments are likely to reach 104.5 million units in 2009. In Q4’09, penetration of LED backlight panels will be as high as 25 percent.
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Currently, portable computers are the leading application for LED backlights, with 4.2 million LED backlit panels shipped for mini-note PCs (netbooks), or 100 percent LED penetration, and 5.9 million for notebook PCs, or 26 percent penetration, in Q1’09.

All mini-note PCs used wedge type LED backlight design, but it is expected that slim type backlights will be used starting in Q2’09. In Q1’09, 76 percent of notebook LED backlit panels used wedge-type light guide plates. HannStar led in shipments LED backlight panels for mini-note PCs, while LG Display was the leading supplier of LED backlit panels for notebook PCs.

In desktop monitors, LED backlit panels shipments were only 0.1 million in Q1’09, representing less than 0.5 percent of LCD monitor panels shipped in Q1’09. The value of LED backlights for LCD monitors is still not clear to end users, therefore the adoption is limited. For TVs, shipments of LED backlit LCD panels were 0.4 million in Q1’09, concentrated in 40”, 46” and 55” as Samsung launched side-lit LED TV models. Table 1 shows the top five LED backlit LCD panel makers in Q1’09.

Table 1: Q1’09 Top Five LED Backlight Panels Makers and Shares by ApplicationSource: DisplaySearch Q2’09 Quarterly LED Backlight Panel Shipment & Forecast Report

Mini-note panels will remain 100 percent LED in 2009, and the LED backlight supply chain and panel suppliers are focused on increasing LED backlight penetration in other applications this year.

In Q3’09, LED backlights will exceed CCFL backlights in notebook LCD panels, reaching 53 percent penetration. LCD TV panel makers are planning to ship 4.3 million panels with LED backlights in 2009, 68 percent side-light type and 32 percent direct. Table 2 shows the forecast of the top five LED backlight panel maker shares by application.

Table 2: Forecast of 2009 LED Backlight Panel Maker SharesSource: DisplaySearch Q2’09 Quarterly LED Backlight Panel Shipment & Forecast Report

According to David Hsieh, Vice President of DisplaySearch: “The driving factors for the fast growth of LED backlights are slim and lightweight form factor, lower power consumption, market differentiation, dimming backlight capability, wide color gamut, and the trend towards green displays. However, there are many challenges in LED backlight design, components availability and cost, and panel makers are working closely with LED backlight supply chain participants to increase shipments.”

Hsieh added: “The growing LED penetration in TFT LCD will raise new issues such as LED cost management, LED chip availability, and changes in backlight structure. As LED production shares the same capacity with the lighting market and many LED companies are evaluating the strategy for backlights, the market has some concerns over LED availability. We believe LED supply chain management will be a key success factor for panel makers and will reshuffle the competition landscape from now to 2010.”

LED-backlit LCD-TVs to grow to 39 percent by 2013

EL SEGUNDO, USA: As prices of LCD panels that use LED backlights fall in the coming years, their use in televisions is set to explode, iSuppli Corp. predicts.

Global shipments of LCD-TV panels with LED backlighting will rise to 90 million units in 2013, up from just 438,000 LED TV panels in 2008. Penetration of LED-backlight technology in LCD-TV panels will increase to 39 percent in 2013, up from 3 percent in 2009.

“The price gap between LEDs and CCFLs traditionally used for LCD backlighting has narrowed due to the higher yield rate of LEDs, as well as the oversupply that resulted in a drastic price reduction for LEDs in the second half of 2008,” said Sweta Dash, senior director, LCD research at iSuppli. “And with the advent of green technology, power savings and thinner form factors, more branded manufacturers are looking at LED-backlit LCD-TVs in 2009. These factors are spurring brand-name television manufacturers to adopt LED backlighting.”

The figure presents iSuppli’s forecast of global shipments of LCD-TV panels equipped with LED backlights for the period of 2008 through 2013.

iSuppli Figure: Global Forecast for Light Emitting Diode (LED) Backlights in Large TFT-LCD TV Panels, 2008-2013 (Thousands of Units)Source: iSuppli Corp., June 2009

LEDs emerging at last in TVs
Branded television manufacturers have offered LED-based LCD-TVs for some years now without much success. Mostly, this was due to a higher price and larger cost differential between LED and CCFL products. However, there is a renewed interest for LED backlight-based LCD TVs with the use of white LEDs.

Instead of focusing only on color gamut, picture quality and high-end RGB solutions, manufacturers are starting to concentrate more on thinner form factors and lower power consumption with the use of side-mounted white LED backlight solutions.

The lower price differential between CCFL and white LED solutions, combined with the lure of thin TV, has led to an increasing adoption rate of LED-based TVs. Branded manufacturers such as Samsung also are focusing on shifting a significant portion of their LCD-TV offerings to LED backlights.

Green light
For LCD-TVs, panel suppliers are offering products with 120Hz frame rates with edge-lit LED backlights to achieve thinner form factors, lower power consumption and mercury-free “green” attributes. In some cases, power savings with the use of LED backlights can be as high as 30 percent to 50 percent. Thickness and weight savings also can be as high as 30 percent to 50 percent.

Owing much to the “green” initiative from many countries in the world, lower power requirements for TVs are expected in the next few years, and the current power-consumption level of many TVs may end up being below these requirements. This will lead to a faster shift to lower-power-consumption products.

In a recent consumer survey presented in iSuppli’s April edition of its US TV Consumer Preference Analysis, more than 50 percent of U.S. consumers take into account the “green initiative” factor when purchasing TVs.

Supply in chains
However, because LEDs also are used for general lighting purposes, there recently has been some concern about LED chip supply. Furthermore, the LED backlight supply chain is still evolving with varieties of solutions and many different suppliers that need to be involved.

Already, panel suppliers are either entering joint-venture partnerships or developing their own in-house LED solutions to streamline the value-chain process, reduce costs and gain better control over the supply.

New innovations and higher performance will help LEDs gain faster adoption in TVs in the years to come. The price difference for LED vs. CCFL TV systems may range from $300 to $700, depending on the size and type of LED used. The gap, however, is expected to narrow in the future, and many branded TV manufacturers are planning new LED-based TV models with very aggressive prices in the second half of 2009.

Given the current high price gap between CCFL- and LED-based LCD-TV sets and panels, panel suppliers are hoping to reduce the price difference —- to less than $100 between the 40/42-inch CCFL and LED-based panels, and to below $150 for 46-inch panels. This compares to a difference of more than $150 for 40/42-inch sizes at present.

With increasing importance being placed on lower power consumption and green initiatives, televisions are expected to have more stringent requirements in the future. LED backlights will enable next-generation TVs to fulfill those requirements.

Analysis of Indian LCD panel market

DUBLIN, IRELAND: Research and Markets has announced the addition of Frost & Sullivan's new report "Analysis of the Indian LCD Panel Market" to their offering.

This study analyses the Indian market to identify opportunities available; when setting up a LCD panel manufacturing facility, from a demand perspective

Wide scope of application and high local demand for LCD panels make it the ideal time for LCD panel manufacturing in India

Television sales have been rapidly surging; the Indian mobile handset market continues to grow despite turbulent economic conditions and the usage of industrial displays is also on the rise. Thus, the applications of LCD panels and awareness about it have drastically increased in India.

Commonly used applications including the television, monitor, and mobile handset use thin-film transistors LCD (TFT-LCD) panels, whose penetration rate is growing substantially compared to the traditional displays.

The evolution of the Indian manufacturing ecosystem is a new trend, with several manufacturers considering India as an export hub for various product lines. Local demand, export prospects, government initiatives, wide applications, and low set-up costs during the economic decline, favor LCD panel manufacturers, making it an ideal time for LCD panel manufacturing in India.

"India is geared up for LCD panel manufacturing," says the analyst of this research. "Increased LCD product line consumption, growth in the electronics industry despite temporary slackening and the expansion of manufacturing industries in India will be strong growth boosters for the Indian LCD panel markets in the next one to four years."

LCD displays are the solutions to the rising need for lower power-consuming, space-saving, and better displays. LCD has a high penetration rate compared to the traditional display technologies and is here to stay in the market.

In India, LCD displays are soon expected to exceed cathode ray tube (CRT) displays in sales. No other flat panel display technology is as price competitive as the LCD displays. It also offers better value, thereby paving the way for significant opportunities for LCD panel manufactures in the coming years.

Rising notebook PC and TV sales send large-sized LCD panel prices up

EL SEGUNDO, USA: Average pricing for large-sized Thin Film Transistor (TFT) LCD panels is increasing at a stronger-than-expected rate in May due to a rebound in notebook PC demand and surprisingly robust television sales, according to iSuppli Corp.

“While desktop PC monitor panel prices experienced a recovery in February, notebook panel prices continued to decrease throughout the first quarter due to weak demand,” said Sweta Dash, senior director for LCD research at iSuppli.

“However, by May, virtually all large-sized panels -- i.e., those with a diagonal dimension of 10-inches or more—experienced price increases compared to April, including notebook PCs and LCD TVs less than or equal to 37-inches in size. Even the 40/42-inch TV panel prices started to stabilize after months of price reductions.”

Pricing in May is set to increase by $3 to $7 for monitor panels, by $2 to $6 for notebook panels, and by $5 to $8 for 26- and 32-inch television panels.

This trend is expected to continue in June and July with the prices of most panels tracked by iSuppli continuing to increase. Prices will remain on the rise in the third quarter during the holiday build season.

In anticipation of these developments, suppliers have reduced their shipments by drastically cutting utilization rates of their fabs, making panel supply tight and helping to drive up prices as a result.

“China continues to be the key growth region, thanks to the government’s rural subsidy program and the upcoming Golden Week holiday,” Dash said. “Demand from the US market also is intact.”

Among panel suppliers, inventory is reportedly low at about two weeks—the same as it is for panel buyers. Many branded vendors and system integrators are suffering panel shortages for some sizes, although they are seeing improvement from the April level.

With most TV, monitor and notebook panel pricing hovering at the cash-cost level, panel suppliers are trying hard to increase prices in order to make a profit. As a result, pricing for the 26-, 32- and 37-inch TV panels as well as monitor and notebooks panels showed higher-than-expected increases in May.

The figure presents iSuppli’s price estimate for a panel indicative of market trends—the 32-inch WXGA TV LCD panel market for the period of the first quarter of 2007 through the fourth quarter of 2009.Source: iSuppli

Average pricing for these panels is set to rise to $174 in the second quarter, up from $153 in the first. Pricing will increase again to reach $185 in the third quarter.

As iSuppli reported this week, even amid the current economic downturn, consumers are continuing to purchase flat-panel televisions. However, with disposable incomes having been squeezed, U.S. consumers are gravitating to smaller-sized sets. Because of this, sets sized 32-inches and smaller went into short supply starting in April, contributing to a rise in panel prices.

Panel makers raise prices in 1HMay amid financial pressure

TAIPEI, TAIWAN: According to WitsView’s initial survey, the end market demand in 2Q09 remains uncertain. Still, amid the impact from the financial storm last year, the 2009 production plans in the general supply chain have been overly conservative. In addition, panel makers were forced to significantly cut back their utilization rates to reduce their cash out pressure in 4Q08.

Owing to China’s demand and better-than-expected sales in the emerging markets, Europe and the US during 1Q09, the panel demand started to pick up after Jan09. Boosted by China’s demand and downstream clients’ inventory replenishments, the monitor and TV panel shipments, both respectively, grew by 2 percent QoQ.

As for the large-sized NBs, the still sluggish demand resulted in NB panel shipments to tumble by 19 percent over 4Q08. Fortunately, the persisting inventory clearing, inventory restocking by downstream vendors and new product launches of 16:9 LED backlit NBs has helped NB panel shipments to also experience monthly increases now.

With panel makers still posting big losses in 1Q09, they must try to further raise prices in 2Q09 to generate more cash in. For 1HMay, WitsView projects IT and TV panel prices to see a 2~3 percent rise.

The panel prices for 1H May will be released by WitsView on May 5th.