Short-term glass substrate shortage problems a positive development to the panel industry

TAIPEI, TAIWAN: According to WitsView's analysts, the rapid utilization rate increases by panel makers has cleared away the previously accumulated glass substrate inventory in recent months. The current glass substrate output is now immediately consumed by eager buyers.

As the capacity increases from the furnaces can not keep up with the rising glass substrate input, a shortage has occurred. But it should be noted the shortage only encompasses certain panel makers and production lines. The G5 and G6 currently face a more serious glass substrate shortage, while the G7.5 and above are less affected, due to the more limited of both suppliers and buyers.

But despite the supply gap and pressure from clients, glass substrate makers have no plans in moving up their schedule in restarting additional furnaces. The primary reason lies in their different market focus against panel suppliers.

Given the strong sales of some regions, and the persisting panel prices growth, it has triggered a sharp panel order increase in the short-term. But the influx of panel orders does not 100 percent represent a full market recovery. One must also consider the global end market sales, inventory levels of the entire supply chain and actual consumer spending.

The glass substrate segment is a market dominated only by a few players. Thus, their respective market share is considered more stable, rendering them to pay more attention to the longer term panel growth over gaining short-term orders. Fortunately, with the traditional strong third quarter arriving, the concerns on the actual panel demand should ease. Thus, additional furnaces are expected to be restarted in the near future. After two to three months, the supply gap should improve, as the glass substrate capacity gradually increases in 3Q09.

Although the current glass substrate shortage has resulted in panel makers unable to accommodate all the orders, it is a positive development to the industry as a whole. The tight glass substrate supply will help control the total panel output, which will help maintain the panel demand momentum and upward panel price trend. Moreover, this also minimizes earlier inventory pull-ins, which are conducted amid fear of further panel price increases. This helps prevent possible inventory build-ups, which may subsequently affect the demand and supply during forthcoming quarters.

Amid the current tight supply, it has naturally helped stabilize the glass substrate and color filter prices. "For 2Q09, the former is expected to all by 2~3 percent, while the latter is set fall by 4~5 percent. As for 3Q09, their respective price declines are projected to further narrow," said Eric Chiou, WitsView's component analyst.

SI and brand monitor shipment growth weaker than expected in April

TAIPEI, TAIWAN: Following the notable inventory replenishments during 1Q09, it started to cool down a bit during Apr09. By also taking into account the continued monitor panel price increases, these developments should help further shed light on the extent of downstream vendors’ overbooking and the actual market demand.

Amid a possible slowdown in the sales momentum and no evident rebound in the global economy, suppliers continue to hold a conservative attitude for fear of seeing their inventory running too high again, as witnessed during 2H08.

Thus, the monthly SI shipment growth momentum was not as strong in Apr09. Instead, most SIs saw a small decrease over Mar09. According to WitsView’s survey, in Apr09 the aggregated shipments by the Top 10 SIs reached 12.9 million, up slightly by 2.7% MoM.

According to WitsView’s top 10 monitor brand survey, given the slower inventory replenishments in Apr09, the stock of the downstream retailers and brand vendors returned to healthier levels.

However, as the end market sales were not too strong, the shipment growth of the top 10 monitor brand vendors was weaker than expected, where they reached 10.5 million, slightly down by 0.8 percent MoM.

An interesting aspect in Apr09 was the varying shipments of the vendors, due to the different quarterly end. For the Taiwan and Korean players, such as Acer, BenQ and LGE, the figures were lower over Mar09. By contrast, as Apr09 was the quarterly end for Lenovo, it sought to more aggressively push up shipments.

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.