According to the latest survey by WitsView, the research division of TrendForce, panel shipment reached 50.87 million units in July, decreasing by 8% MoM. The material and labor shortage in 1Q10 resulted in the tight supply of panels, as well as the expectation of supply imbalance; therefore, downstream vendors started to restock aggressively in preparation since 2Q10, leading to the record high panel shipment. However, 2Q10 end-market demand was lower than expected because of the slow season. Accordingly, inventory level among downstream vendors was on the rise. Despite entering the traditional IT product restocking season in July, IT panel demand remained weak. At current stage, inventory adjustment became the main strategy in the supply chain, and it also reflected on the actual panel shipment in July.
Of five applications, LCD TV panel shipment was the only application that increased against the downtrend in July, having 2.1% MoM growth to 17.29 million units. Although LCD TV panel price extended the decline to July, it still had more room for price cut compared to IT panels. Moreover, for downstream vendors’ year-end sales promotion, the price decrease spurred the product pull-in in TV panel. IT panel shipment, on the other hand, recorded a decrease. Considering the shipping cost reduction, downstream vendors increased their ocean shipping ratio and focused on the early restocking for notebook demand in 2Q10. Thus, notebook (≧12.1-inch) panel shipment dropped by 16.4% MoM to 13.58 million units, while netbook (<12.1-inch) panel shipment declined by 12.8% MoM to 2.79 million units since end-market demand shrank. Monitor panel shipment decreased by 9.3% MoM to 16.01 million units because the inventory level among downstream vendors was relatively high which lower their panel demand. Tablet PC panel shipment posted 4% MoM decline to 1.2 million units, yet its base was relatively lower. At current stage, Apple iPad shipment continues to expand, as well as other brand vendors’ plan to launch tablet PCs in 2H10. Thus, tablet PC panel shipment is forecast to maintain its growth momentum.
Table 1: TFT-LCD Panel Shipment in Jul-10 (K units)
WitsView indicated that under the rather high inventory level in the supply chain, firstly, the gradual weakening demand after entering the hot season will help downstream vendors to clear inventory. On the other hand, under continuous decline of panel price, if panel makers are able to control capacity output efficiently, it may lower their inventory level. Hence, panel demand in 3Q10 end to 4Q10 will have to rely on the degree of inventory closeout among downstream customers and capacity adjustment among panel makers; especially if Korea panel makers are not as aggressive as Taiwan panel makers to adjust capacity, the oversupply problem will not be timely solved. Hence, the time for price hitting the bottom will be delayed.