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Panel Price Surge for LCD Monitors...

The strong demand for monitor panels will keep panel pricing high in August. Panel supply remains tight, and panel makers are quoting another $4-6 price increase in the first half of August. Currently, some monitor brands are under pressure to make up for lost ground in the first half of the year, and they are trying to win back some share by aggressively placing panel orders. Some monitor brands and OEMs are reporting that the demand for some panels with 16:9 is not as strong as in previous months. Demand for wide-format 16:10 panels and square types are relatively strong, however. To keep the demand healthy, some panel makers are considering slowing price increase for certain sizes. The price hike of 17" and 19" square panels are higher due to the limited supply base; thus these sizes have the biggest shortages. Downstream brand owners face margin pressure from rising panel costs, and the issue of margin distribution across the food chain remains critical.

Samsung Panel Factories are operating at 30% below capacity according to Chinese Press.

Samsung Electronics' LCD panel utilization rate has dropped to 70% in December, and the company may further cut back panel production in the first quarter of 2009 if demand worsens, according to a Chinese-language Economic Daily News (END) report. Witsview also covered this story

Ten Trends for Worldwide LCD Panel Industry

The year of 2007 for LCD panel makers was a great year with most seeing record profits and sales during the period. ASPs (average selling prices) for end-products did not represent a significant drop as happened in 2006 and demand for small- to medium-size LCD panels experienced a surprising boom thanks to new applications such as handheld devices and digital photo frames as well as low-cost notebooks. For 2008, with the Beijing 2008 Olympics in August and the push by digital TV broadcasting, LCD TVs will continue seeing strong growth, many industry players predict.

Digitimes identifies the following ten trends for the LCD panel industry in 2008.

A healthy supply/demand situation throughout the year

Most major first-tier panel makers such as LG.Philips LCD, Samsung Electronics, AU Optronics (AUO) and Chi Mei Optoelectronics (CMO) show a positive outlook for the year.

Steady growth of the panel market is expected in 2008 with continuous solid business performance resulting from tight supply, according to Samsung. Worldwide large-size panel shipments are expected to hit 465 million units, up 20% sequentially. Stable panel pricing is expected to sustain due to tight supply, predicted the company.

Although some players saw demand for the first quarter weaken amid seasonality, AUO said it still enjoys strong demand from customers. For the full year of 2008, LJ Chen, president and COO, estimated that worldwide LCD panel supply will lag behind demand, adding that on-year demand growth may reach 28-30% while annual supply growth in 2008 is estimated at around 22-23%.

CMO foresees that industry-wide supply shortages will occur in the second half of 2008. First quarter sales are to be slow on seasonality, but will start to rise in the second quarter. 2008 will be a strong year for CMO, the company said.

In line with industry perspectives, research firms such as Displaybank and iSuppli also deliver an optimistic outlook. The LCD industry will likely see its greatest boom ever in 2008, Displaybank forecasts, adding that demand for large-size LCD panels is expected to increase 18% on year to roughly total 450 million units, equivalent to a square meter growth of 27% on year.

Worldwide LCD panel shipments forecast, 2006-2010 (m units)
Application	2006	2007	2008(f)	2009(f)	2010 (f)
Monitor	137.9	169.7	186.6	200.3	214.4
Notebook	79	108.4	132.3	162.7	187.1
TV	57.1	80.1	108.3	136.4	154.8
Others	10.4	12.5	15.6	17.2	19.7
Total	284.4	370.7	442.8	516.6	576

Source: Digitimes Research, compiled by Digitimes, January 2008

Large-size LCD panel demand forecasts for 2008 (m units)
Application	2007	2008 (f)	Growth
Monitor	178.8	199.6	11.6%
Notebook	107.4	129.6	20.7%
LCD TV	81.7	105.6	29.3%
Others	11.6	12.9	11.2%
Total	379.5	447.7	18.0%
Area (m2)	50.5	64.3	27.2%

Source: Displaybank, compiled by Digitimes, January 2008

Worldwide TFT LCD panel outlook, 2007-2008
Application	2007	2008	Y/Y growth
Monitors	175	198	13%
Notebook	114	139	22%
TVs	86	112	30%
Total	388	465	20%
Area (m2)	54	70	29%

Source: Samsung Electronics, compiled by Digitimes, January 2008

Taiwan-based panel makers to generate nearly NT$200 billion (US$6.2 billion) profits

LCD panel makers such as AUO and CMO reported record sales in 2007 and the two are expected to set another record in 2008 amid growing shipments and rising prices, according to industry estimates.

The sources indicated that AUO expects to grow annual profits of NT$80 billion in 2008, compared to NT$60 billion in 2007. Meanwhile, as CMO has a new 6G plant, and the second-stage of its 7.5G line to come on board this year, the company should see its shipments grow 25-30% sequentially, higher than the industry standard. Overseas investment analysts have estimated the company may post net profits of more than NT$50 billion, compared to NT$36 billion in 2007.

Of second-tier makers, Chunghwa Picture Tubes (CPT) and HannStar Display may enjoy annual profits of NT$20-25 billion and over NT$10 billion in 2008, respectively, market watchers estimate.

Large-size panel competition heating up

Demand for large-size LCD TV panels will continue heating up in 2008 with LCD poised to compete with PDP technology in 50- and 60-inch segments.

The Beijing Olympics will boost market share for full HD products. With retail prices for 40-inch and larger TVs to drop further, demand for the 40-inch class TV market will increase. According to iSuppli, 40/42-inch LCD TVs will be dominant by 2011.

For the notebook panel market, widescreen is definitely hot. According to Asustek Computer, in the first quarter of 2009, less than 1% of notebooks will feature a 4:3 aspect ratio.

Among widescreen notebook panel competition, apart from 16:10 products, the 16:9 widescreen panel market will see a rising share this year as more HD content comes available. 16:9 is more suitable for entertainment purposes, according to Tony Chen, COO of Asustek. Currently, 16:10 is currently the mainstream aspect ratio in the notebook market.

Samsung is planning to launch into the 16:9 16-inch widescreen segment while AUO and CMO are both developing 16:9 15.6-inch panels.

Widescreen will also be significant in the LCD monitor panel market. The market is shifting from 17-inch to 19-inch and above due to higher adoption of widescreen formats. The shipments proportion of 22-inch panels is expected to grow to 21% by 2011, compared to only 1% in 2006, iSuppli forecasts.

Widescreen will also become available in 15-inch or 16-inch monitors later in 2008 with AUO and CMO rolling out 15-inch widescreen and 15.6-inch widescreen monitor panels, respectively. China-based panel makers such as Shanghai SVA-NEC Liquid Crystal Displays (SVA-NEC) and BOE Optoelectronics Technology (BOE OT) are also opting for 15.6-inch widescreen (16:9) panels for their new monitor products.

CPT and AUO are reportedly to launch 18.5-inch widescreen monitor panels.

Small- to medium-size panel market lifted by new applications

Small- to medium-size LCD panel supply may experience another shortage in 2008 amid drivers in different markets such as digital photo frames, handsets, digital cameras, PNDs and low-cost notebooks.

Shipments for small- to medium size LCD panels are expected to surpass five billion units by 2011, compared to four billion units in 2007, according to iSuppli's latest forecast.

Benefiting from strong China white-box handset demand, Taiwan LCD panel makers saw their shipments of small- to medium-size panel shipments rebound starting from the beginning of 2007 prompting them to focus more on the sector. Gradually through to the end of last year, demand for small- to medium-size panels grew, lifted by the launches of Apple's iPhone and low-cost notebooks. Low-cost notebooks and photo frames consumed the 7-inch panel market, which was previously occupied by portable DVD players.

Taiwan-based LCD panel makers are also developing the touch panel segment in 2008. Innolux Display plans to ship capacitive touch panels starting in the first quarter of 2008 with monthly capacity to total 133,000 units, compared to 130,000 units in the fourth quarter of 2007.

Cando, an affiliate of AUO, announced in November it would invest NT$2-3 billion to build a 3.5G plant to support AUO's in-cell touch panel technology development. Mass production will commence in May 2008 with an initial monthly capacity of 5,000 units.

Small- to medium-size panel consolidation status, 1Q08
Panel maker	LCM manufacturers	Application
AUO	20-in-house	Mobile, DSC, low-cost notebook
CMO	Chi Hsin Electronics (subsidiary), Tianma, Truly, BYD	Mobile, 7- to 8-inch
CPT	Partnership with GiantPlus	Mobile, 7-inch
HannStar	Sold two 3G plants to Wintek	-
Wintek	In-house	Mobile
PVI	Bought BOE-Hydis LCD plants	7-inch, electrophoretic display (EPD)
Innolux	In-house	Mobile, 7-inch
LG.Philips LCD	Chinese LCMs, SDI	Mobile
Samsung Electronics	In-house	Mobile, PND
Seiko Epson	In-house, might exit LCD business	Mobile

Sources: Companies and iSuppli, compiled by Digitimes, January 2008

LED-based BLU and low-cost products hot in the notebook market

The low-cost notebook market will continue rising strongly in 2008. Asustek plans to launch 8- and 9-inch version Eee PCs and aims at a shipments total of 4-5 million units.

Worldwide, low-cost notebooks may hit 10 million units in 2008 with Acer, Hewlett-Packard (HP), Gigabyte Technology, and Micro-Star International (MSI), among others, all planning to launch similar products.

The penetration rate of notebook panels adopting LED backlight technology will exceed 10% in 2008, David Su, senior vice president of AUO predicted in October of 2007. LCD backlight unit (BLU) maker Radiant Opto-Electronics hopes LED BLUs can account for 10% of its total notebook application products shipped in 2008, according to industry sources.

40-inch class TV market to gain significant share

Prices for LCD TV panels will drop 4%-11% sequentially in 2008, according to industry estimates.

For the 32-inch segment, prices are expected to fall to US$320 by the end of 2008, from US$332. ASPs for 37-inch TV panels will decrease 7% to US$410 by the end of the year, the sources noted.

If supply for 32-inch TV panels continues to run tight, LCD brand makers may not drop prices for the segment further due to profit concerns. Therefore, brand makers may opt to adjust 40-inch class TV prices to stimulate demand. With the prices for 40/42-inch TV panels to fall 11% sequentially in 2008, customers may be more willing to buy 40-inch class TVs.

OLED market on the rise

With Sony having realized OLED technology as a commercial product in the TV market in late December, more makers are showing interest in the OLED market.

Samsung Electronics showcased two (14.1-and 31-inch) OLED TVs at CES 2008 and the company stated it will begin commercial production of medium- to large-size OLED TVs around 2010.

Shipments of OLED TVs will rocket from 2,000 units in 2007 to 18,000 units in 2008, and will further shoot to 50,000 units in 2009 and 120,000 units in 2010, according to a Digitimes Research report published in late December.

There are also new comers for OLED panel market. In December, three Japan-based companies: Hitachi, Canon and Matsushita Electric Industrial announced they had decided to work together on OLED technology.

OLED is not only hot for the large-size market. More and more OLED panels are being adopted by the small- to medium-size handheld device market.

Some industry players predict that OLED technology will brighten the future of the TV, handset, monitor and lighting markets within five years.

LCD component makers to maintain close relations with panel makers

LCD equipment depreciation rates have fallen to 10% at present, compared to 20-30% in the past, while the production cost proportion for LCD component materials has increased to 70%.

In response panel makers are choosing to step into the upstream LCD component market to further reduce production costs.

While panel makers are working on vertical integration, pure LCD component makers will have to aggressively maintain their relationships with panel makers to survive.

Larger scale for first-tier and second-tier panel makers

First-tier LCD panel makers are scheduling next-generation LCD plants. Samsung is even discussing internally the feasibility of 11G lines which would focus on 70-inch panels, according to industry sources. Sharp held the ground breaking ceremony for its 10G plant on December 1, 2007 with the plant to kick off operations by March 2010. The main product of Sharp's 10G line will be LCD panels for large-screen LCD TVs in the 40- to 60-inch class.

First-tier players such as Samsung, LG.Philips LCD, AUO and CMO have all made progress on 8.5G lines. Samsung's 8-1 phase 2 ramp will start during the third quarter of 2008 with a monthly capacity of 60,000 substrates, stated the company in December.

LG.Philips LCD has guided a 2008 capital expenditure (capex) of approximately three trillion won (US$3.2 billion), to be utilized for the creation of 8G LCD facilities and production efficiency enhancement at existing facilities. The 8G line will enter volume production in the first half of 2009.

AUO and CMO both recently announced 8.5G plans. The two companies will see equipment move-in for the new plants by the end of 2008 with volume production set for the the second half of 2009, according to the companies.

Second-tier LCD specialists such as CPT and HannStar Display are changing their strategy and are not eyeing next-generation plants. Instead, they will focus on financial improvement and product mix.

CPT has not yet finalized its next-generation projects, and indicates that a final decision will be made by the end of 2008.

HannStar, which has struggled for the past few years, finally made a profit starting from the second quarter of 2007. The Taiwan-based panel maker also entered into a strategic alliance with LG.Philips LCD, seeking ways to differentiate from first-tier makers.

More TFT alliances between brand and panel makers?

In September 2007, CMO and TPV Technology announced a strategic alliance. The partnership is expected to help the two in terms of LCM deployment. CMO currently has an LCM base in Ningbo, China while TPV has said it will further expand its Ningbo factory to stay competitive. Other major panel makers are also developing relationships with brand or system makers, for example Qisda/AUO and Proview/CPT.

First-tier TV brands such as Samsung, Sony, Sharp, LG, and Panasonic all have their own panel plants while China TV brand makers, in contrast, do not maintain self production.

China will surpass Japan to become the third largest LCD TV market in the world in 2008, market sources estimate. The huge demand will further push China's local TV brand makers to seek more stable support from panel makers outside of China. To this point, there could be more potential alliances between China TV brand makers and panel makers expected this year.

Panel News from Witsview

Taiwan-based panel makers respectively unveiled their 4Q07 financial results this week ahead of the Chinese Lunar New Year. In essence, 2007 was a banner year for them. Looking to the year ahead, they expect the market fundamentals for the TFT LCD industry to remain relatively strong, and plan to significantly boost their annual capital expenditure. For 1Q08, an oversupply is expected, but will return to a more balanced state in the second quarter. Still, amid a notable inventory pull in effect the production utilization rate has remained high, resulting in the traditional weak seasonality of the first quarter to be stronger than usual. Nevertheless, the seasonal slowdown and fewer working days in February have still caused the aggregated panel shipments to weaken. Separately, much attention has been placed on the recent snow storm in mid-eastern China, which has seriously disrupted the area’s overall transportation networks. Although it has affected the delivery time to clients, to date, according to WitsView’s observation the impact appears limited.

According to WitsView’s panel price survey for February, with only two working days left before the Chinese Lunar New Year begins next week, and the fact that most downstream clients moved up portions of their panel order originally slated for February to January, the likelihood for them and the panel makers to conclude February’s price terms will be remote. The negotiations are expected to be finalized after the Chinese Lunar New Year. Based on the current market trend, brand clients are trying to negotiate for a much lower panel price in 1Q08, as a possible rebound is projected to arrive in the second quarter. Thus, panel makers should be under higher price pressures in February. WitsView expects IT panel prices to drop by 3~5%. Meanwhile, for the TV segment, the 37W and below sizes should stay relatively the same as in January, while the 40W and above is projected to decline by 1~2%.

18.5 the new lcd size according to CPT and AU

Chunghwa Picture Tubes (CPT) has changed its strategy for 18.4-inch widescreen LCD monitor panels and has decided to launch 18.5-inch widescreen panels instead, according to market sources. The sources added that CPT will begin offering the panels in the second half of 2008.

In late December, CPT announced in a press release that it will begin to volume produce 18.4-inch widescreen LCD monitor panels at the end of the second quarter of 2008. The panels were to be produced at CPT's sixth-generation (6G) LCD plant with each substrate being able to be cut into 24 pieces.

However, demand for 18.4-inch widescreen panels is rather slow, according to LCD monitor brand makers. Several pointed out that they originally planned to introduce 18-inch widescreen monitors in the market. However, as the price gap for 18-inch widescreen and 19-inch widescreen monitors would only be US$15, customers are likely to choose the larger monitor in the end. This has pushed makers to think twice on developing 18-inch widescreen monitors, they added.

If however panel makers roll out 18.5-inch widescreen panels, LCD monitor brands will be able to sell a 19-inch widescreen monitor using an 18.5-inch panel, the brand makers stated, and this will increase willingness to buy 18.5-inch panels.

In order to compete against Chi Mei Optoelectronics (CMO) who has taken the lead in both 19-inch widescreen and 22-inch widescreen, LCD panel makers such as CPT and AUO are working on developing a new size standard.

AUO, which was reportedly also planning to ship 18.4-inch widescreen monitor panels, will also change its strategy and opt for the 18.5-inch segment, indicated the sources.

Display Search Panel Track Dat for December 2007

LCD Monitor Panels

Shipments of monitor-type panels for LCD monitor and small TV applications fell only 5% M/M in December, which was a stronger showing than in recent months. The monthly total was 15.6M units, a 32% increase Y/Y. Shipments of 19" wide-format panels led the growth with a 3% sequential increase and displaced 17" panel types from the #1 position for the first time. Together, 19" wide and narrow formats comprised 43.3% of monitor panel shipments in December. Shipments of 17" panels fell 31% from November to a 20.8% share. The trend towards wide will continue. There have been developments to shift LCD monitor panels to 16:9 aspect ratio, which will blur the line between PC and TV panels further. Samsung continued to lead this application in December with a 17.9% unit share. AUO and CMO tied for second place with 15.2% unit shares. LPL followed with a 13.9% share, down from 15.1% in November.

Witsview Panel Pricing Comments 2H Jan

According to WitsView’s 2H Jan panel price market survey, IT panels continue to be affected by the slow season. Due to the fewer working days during the Chinese Lunar New Year holidays, panel shipments are expected to hit bottom during February. Meanwhile, the front-end glass substrates input remains in high gear, as the market expects a future panel shortage to occur. Amid a market demand slowdown and a gradual increase in the inventory levels, the panel price pressure continues to grow. By contrast, underpinned by the strong demand from downstream clients, prices for the 37W and below have stayed firm. However, due to the seasonality effect, the current tight supply is expected to gradually ease in the near future. Finally, in light of an increased panel supply, prices of the 40W and above will continue to decline, albeit at a moderate rate.

The panel prices for 2H Jan will be released by WitsView on January 21th.

Display Search Latest 2h Jan Pricing for Panels

Size	Resolution		Oct	Nov	Dec	1H Jan	2H Jan	Change
15"	XGA	High	$121	$121	$116	$113	$112	-$1
		Typical	$115	$115	$110	$106	$104	-$2
		Low	$109	$109	$105	$104	$102	-$2
17"	SXGA	High	$139	$140	$138	$132	$131	-$1
		Typical	$137	$138	$134	$128	$127	-$1
		Low	$134	$134	$131	$126	$125	-$1
19"W	WXGA+	High	$143	$143	$139	$133	$131	-$2
		Typical	$139	$140	$137	$130	$128	-$2
		Low	$134	$135	$132	$127	$126	-$1
19" TN	SXGA	High	$164	$160	$156	$151	$150	-$1
		Typical	$159	$159	$154	$147	$145	-$2
		Low	$156	$156	$150	$144	$142	-$2
20"W	WSXGA+	High	$158	$158	$153	$146	$143	-$3
TN		Typical	$150	$151	$148	$140	$139	-$1
		Low	$144	$144	$139	$138	$136	-$2
22"W	WSXGA+	High	$185	$187	$179	$173	$171	-$2
TN		Typical	$180	$181	$175	$168	$165	-$3
		Low	$175	$175	$170	$163	$163	$0

Size	Resolution	Comments on LCD Monitor pricing
15"	XGA	Price pressure continues, so prices declined another $2 on average in the second half of January. The price trend for 15" panels will depend heavily on the pricing strategy of Chinese makers because they ship 60% of global panels. The supply base of 15" will shrink, with EOL plan for 15" of some panel makers, and the market spotlight in 15" category is the low-cost wide format products, include 15.0"W and 15.6"W. 17"W monitor panel prices continue to drop and close to $115 level in January due to special promotions. The price pressure of 15" remains in Feb'08.
17"	SXGA	The 17" over-supply comes from weakening demand and fast-eroding profit margins of monitor vendors. Monitor brands (especially stand-alone vendors) and system integrators are asking for more price concessions from panel suppliers. In the light of slowing demand for 17" monitors, some panel makers are adjusting 17" monitor panel production by shifting Gen 6 capacity to TV panels. Price pressure on 17" monitor panel remains in Q1'08, and the industry is expecting the price to bottom out at $115-120.
19"W	WXGA+	The 19"W market was reversing to excess supply and the panel price continued to drop. But 19"W LCD TV demand is growing, and it shares supply with 19"W monitor panels. Though price pressure remains across all sizes in monitor market, it's expected that price reductions for 19"W panels will be smaller because the planned supply of 19"W panels will be less than the aggregate demand in the whole year of 2008. From 2008, the launch of 18.4"W/18.5"W monitor panels in 16:9 aspect ratio might influence the 19"W market.
19" TN	SXGA	Demand for 19" LCD monitors is weak due to high ASP in the market. Monitor vendors continue to ask for more price concessions from panel makers, and it's expected that the price of 19" panels will drop in coming months. On the supply side, the supply base for 19" monitor panels is shrinking. There are some special prices for strategic promotion among the vendors. 19" supply will be reduced by more than 30% in 2008 with one leading panel maker phasing out 19" panels in 1H'08 and the rest have no intention to increase the capacity for 19".
20"W TN	WSXGA+	The market is experiencing an excess supply, and price of 20"W panel declined to $139 on average in January. Overall, the supply of 20"W is limited, and some panel makers are reporting supply issues due to the rising demand for some models. As a result, panel makers plan to stabilize the price of 20"W in February.
22"W TN	WSXGA+	22"W monitor panel market is suffering from continuing over-supply, and monitor vendors are trying to control inventory and give panel makers more price reduction pressure. 22"W panel prices will continue to drop in February. Some panel makers are developing 16:9 monitor panels in 22"W category (21.5"W) which is an economic cut at Gen 6, and it seems attractive for some monitor brands.

Jan 2008 Price Overview - LCD Panel

Looking back into 2007, due to excessively high inventory levels and impact from the slow season, panel prices fell sharply during 1Q07. In response, panel makers reduced both the glass substrate input and production utilization rate in bringing the market back to a more balanced state. In Apr07, panel prices finally began rising, prompting an earlier-than-expected pull-in effect from downstream vendors. The strong market demand subsequently created a panel shortage during 2Q07 and 3Q07. As prices rose consecutively for the next 7 months, panel makers reversed their losses and posted record high revenues and profits. For 2008, the Beijing Olympics and the US scheduled shut down of analogue TV broadcasting in Mar09 are expected to drive a new wave of LCD TV demand. In general, the outlook for the TFT LCD industry in 2008 remains upbeat.

In 2008, additional production capacity will come from CMO’s G6 line and Samsung’s single-funded 2nd phase expansion of S-LCD’s G8 line. The two are scheduled to go online respectively during 1Q08 and 3Q08. In addition, Innolux’s G6, Century’s G5 (1200x1300mm) and CMO’s G8 may also move up their mass production schedule to 4Q08. Coupled by the ongoing production expansion in the G6 and G7.5

19-inch widescreen monitors unlikely to replace 17-inch in the business market, say panel makers

Although the price gap between 17- and 19-inch widescreen monitor panels is narrowing, LCD panel makers recently commented that 19-inch widescreen monitors are unlikely to replace 17-inch monitors in the business market in the short term.

Average selling prices (ASP) for 17-inch monitor panels is around US$133 at present, up 30% from US$100 at the beginning of 2007 amid limited supply. Prices for 19-inch widescreen monitor panels are around US$135 at present, according to market sources.

Purchasing practices of monitors between enterprises and consumers is different. Some enterprises are signing two to three year long-term contracts with brand makers amid strong demand. Unless companies are changing their suppliers, it is unlikely 19-inch widescreen models will replace 17-inch or 19-inch monitors in the short term, said the panel makers.

However, panel makers also added that it is not impossible for widescreen monitors to gain in share in the business market. For example, while panel makers are pushing 22-inch widescreen and 20-inch widescreen to replace 19-inch and 17-inch monitors, respectively, more and more brands are introducing products in the market. The price gap between larger widescreen monitors and standard monitors is closing.