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Inventory Reductions Cause Large-Area TFT Shipments and Revenues to Slip in Q3

SANTA CLARA, Calif. — Shipments of large-area TFT LCDs over 9.1” fell to 163 million units in Q3’10, with 4% Q/Q decline, but 7% Y/Y growth. Revenues reached $21.3 billion, down 7% Q/Q, but up 7% Y/Y. According to the latest Quarterly Large Area TFT LCD Shipment Report, panel makers are targeting just 3% shipment growth in Q4’10, as the capacity utilizations have been in a controlled range due to the slow demand in the end market and supply chain inventory adjustments.

“The TFT LCD industry experienced an oversupply in Q3’10, and as a result, shipments declined, panel prices fell and suppliers reduced capacity utilization rates due to the lack of orders and inventory reduction. However, even as overall shipments decline, LED-backlit panel shipments are still growing, continuing the industry’s irreversible trend toward LED,” noted David Hsieh, Vice President, Greater China Market, DisplaySearch.

Hsieh added, “The Q3’10 performance results are partly due to over-optimism and over-stocking in Q2’10. Looking forward to Q4’10, panel prices, inventories and capacity utilization have all fallen to lower levels. Despite this, the TFT LCD industry is expected to overcome these tough challenges by the end of the year.”

In terms of demand by application, monitors and notebook PCs experienced Q/Q declines, but LCD TV and slate PC applications continued to grow in Q3’10. Notebook PCs suffered the largest Q/Q decline of 14%, while monitors fell by 8% Q/Q. Panel prices for both applications fell drastically from July to October, and only started to see some stabilization in November. Mini-note/slate PCs grew by 8% Q/Q, thanks to soaring 9.7” panel shipments, which increased from 3 million units in Q2’10 to 5.6 million units in Q3’10.

LCD TV panel shipments grew in Q3’10, despite the oversupply situation because of spot deals for brands who are looking to holiday promotions to reduce inventories, especially on 40”+ and LED models. Shipments of 40” and larger LCD TV panels grew from 16 million units in Q2’10 to 18.1 million units in Q3’10. Among them, LED panels grew from 5.8 million units in Q2’10 to 7.8 million units in Q3’10.

Looking forward, panel makers are targeting shipments of 168 million units in Q4’10, which would amount to a 3% Q/Q growth. But for LED-backlit LCD panels, panel makers are aiming to grow shipments by 12%. However, expected total large-area TFT LCD revenues will decline by 9% in Q4’10 due to price erosion in LCD TV panels. In the meantime, LED-backlit LCD panel revenues are expected to fall by 2%, despite the strong expected growth in shipments. This is based on the fact that, in TV applications, price reductions in LED-backlit panels are more severe than for CCFL-backlit panels due to the shrinking LED premium.

For additional information, go to: DisplaySearch

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