Prices of Large LCD Panels Decline to Record Low
January 17, 2000 (TOKYO) -- The pricing structure of color TFT-LCD panels is undergoing a dramatic transformation, with initial changes seen in the prices of TFT-LCD monitors used for PCs.
Prices for 15-in. LCD monitors, which remained stable in 1999 within slight fluctuations between 120,000 yen and 150,000 yen, started falling under 100,000 yen. The balance in supply and demand is becoming unstable, and some panel makers reportedly started approaching monitor manufacturers with proposals for price cuts. (105.66 yen = US$1)
The original projection for LCD shortages in 2000 probably won't materialize, industry observers said.
This trend emerged in mid-December 1999, when Melco Inc.'s 15-in. LCD monitor FTD-XT15F-A started carrying a low price of 99,800 yen. It was the first time for a 15-in. LCD monitor made by a leading manufacturer to be priced less than 100,000 yen.
Although Melco explained that the low price was intended to cut the inventory of the product (which was introduced as early as January 1999), this is not considered to be an exceptional case. The FTD-XT15F-A uses a panel made by Fujitsu Ltd., which retains popularity among end users with its 160-degree viewing angles horizontally and vertically, and with the Multi-domain Vertical Alignment (MVA) technology.
On Dec. 30, 1999, Akia Corp. announced a price cut for LCD monitors between 14.1-in. and 17-in. The price of the RT150EX, a 15-in. LCD monitor, dropped from 119,800 yen to 99,800 yen, running close to Melco's product.
Glut Turns into a Shortage
The prices of LCD panels have fluctuated drastically, due to various supply and demand factors. In 1999, a glut of 2 million TFT-LCD panels (on a 12.1-in. size basis) forced panel makers to cut the market prices by two-thirds. The price of a 13.3-in. TFT-LCD panel dropped to less than 40,000 yen.
Meanwhile, forecasts for the first half year of 1999 had given rise to such expectations that supplies of LCD panels would fall short in the period of fiscal 1999 through fiscal 2001, because many of the desktop PC monitors shifted from CRTs to TFT-LCDs, and the average size of LCD monitors for notebook PCs became larger.
However, contrary to those expectations, the industry started to consider that there was an oversupply of TFT-LCD panels for 12-in. or larger monitors.
"Some panel makers that had extended business connections with us cut supplies or at times suspended business in the first half year of 1999. But now, even panel makers which have never had business relations with us are proposing new deals," a Melco official said.
Some panel makers apparently have a sense of a growing crisis that is forcing them to create new demand.
Prices of Panels Continue to Decline
Already, market prices have started reacting swiftly to the trend. "In some cases, a panel maker offers a price reduction of as much as US$30 for a 15-in. TFT-LCD panel," said an official at a monitor maker.
Under these circumstances, it is quite natural that an increasing number of monitor makers, including Melco, are start to plan for lower prices of their 15-in. monitors. Some of them will be set under 100,000 yen.
Why is it that the short supplies of TFT-LCD panels, which were very apparent in the first half of 1999, have started slackening at this time? LCD monitor makers point out two reasons -- stagnant demand and the growth of supplies.
First, the prices of TFT-LCD monitors were stable in 1999. They remained between 90,000 yen and 100,000 yen for 14-in. types, and between 120,000 yen and 150,000 yen for 15-in. types, while the prices of CRT monitors dropped so drastically that they have cooled down the demand for TFT-LCD monitors.
Prices of 17-in. CRT monitors, which were 55,000 yen to 75,000 yen at the end of 1998, have come down to 35,000 yen-50,000 yen. The debut of "white box" PC products in 1999 made the price of a set of a desktop PC and a CRT monitor almost equivalent to that of a 14-in. LCD monitor.
Even some PC models with CRT monitors offered by major computer makers, such as NEC Corp. and Dell Computer Corp. Japan, are priced under 100,000 yen. For this reason, some primary LCD monitor makers have started holding increasing inventories during the last couples of months, an Akia official said.
Second, Taiwan's five makers, which invested heavily in 1999, started marketing LCD monitors as well as LCD panels. Melco said it often competes with companies such as Taiwan's Acer Inc. when it puts in bids to governmental and municipal offices. That's the market on which Melco is focusing its efforts.
In 2000, panel makers aim to produce LCD panels for use in TV sets that can display moving images. But they may have to change their strategies, according to the circumstances surrounding the demand for LCD monitors of PCs.
Related story:
Supply Shortage of Large TFT-LCD Panels to Ease in 2000: Survey
(Yoichiro Hata, Staff Editor, Nikkei Electronics)
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