Taiwan's TFT-LCD Panels Slumping for Notebooks, Up for Monitors
March 9, 2001 (TAIPEI) -- U.S. notebook PC makers have continued to adjust their inventories since they witnessed an increase in inventory levels for some consumer PCs in the third quarter of 2000.
Since December 2000, in particular, supply has exceeded demand for PCs geared toward corporate customers. The recent sluggish PC sales in the United States, which is seen regardless of the type of makers or product lines, is causing Taiwanese panel makers to suffer from sagging orders for their notebook PC panels.
Meanwhile, panel demand for monitors has started recovering, backed by an increase in orders from Taiwanese monitor OEM makers. Behind the scenes, prices for panels seem to have hit bottom and U.S. major monitor makers and smaller makers are increasingly raising panel orders to meet demand for their low-priced monitors.
Industry observers believe that expensive liquid crystal display (LCD) monitors are restraining the growth of overall sales. Therefore, whether low-cost monitors can tap new demand in the United States is drawing attention. This suggests that there's a need to distinguish between demand for panels for notebook PCs and that for monitors, when examining future panel demand.
However, considering the prevailing macro-economic conditions, it remains unclear whether the U.S. monitor market will pick up. A timeline of about a couple of months is necessary before seeing any results.
Two likely scenarios are seen for panel demand in the coming months.
One scenario is that increased demand for monitors in the United States will encourage a recovery in demand for panels, which then boost panel prices and enable companies that produce monitors, panels, and materials to improve their earnings.
The other one is that a failure to reinvigorate the U.S. monitor market could culminate in sluggish demand for panels, which would subsequently triggers a further drop in panel prices or makes prices fluctuate at low levels. Yet, prices of materials already have come under downward pressure as material makers are struggling to obtain orders even if they know such orders will result in losses, and this would mean that makers of panels and materials could see their earnings performances continue to slump for a long time.
Taiwan's panel makers, excluding Chi Mei Optoelectronics Corp., saw continued sluggish demand in January, with its operating ratio remaining at a low level. Industry observers are keeping an eye on the February sales figures of panel manufacturers, but it will take some time before panel makers raise their operating ratios to 100 percent, to meet a recovery of demand. This is because weak demand for panels for notebook PCs will have some negative impact on the lifting of factory operations.
For Taiwanese panel makers, an increase in panel prices is needed to restore profitability. Also, Korean panel makers, known as Taiwan's strong competitors due to their higher cost effectiveness (than in Taiwan), may offer lower prices to attract more customers. Also, operations at Japanese panel makers, or Taiwan's main OEM customers, will impact the amount of orders they place with Taiwanese makers. Given those factors, Taiwanese panel makers are facing difficult times to improve their profitability.
Previous report: January Sales Hit Bottom for Some Taiwan PC Parts Makers
(Yasuo Nakane, Senior Analyst, Daiwa Institute of Research Taipei Representative Office; Special to Nikkei Microdevices) |
