In 3Q10, the global large-sized panel shipments dropped by 4.6% QoQ to 15.6 million units. It posted the first QoQ decline after the shipment growth for five straight quaters, which mainly attributed to the fact that downstream customers restocked early in 2Q10 under the expectation of the possibly tight supply in panels in 3Q10, according to WitsView. Meanwhile, the Europe’s market was impacted by the debt crisis; additionally, the slow recovery in the global economy slashed end-market demand as well as the lower-than-expected back-to-school demand in 3Q10. As a result, the inventory level among the supply chain surged rapidly and it was not able to be cleared away timely. Under the pressure of inventory adjustment at downstream, downstream vendors reduced panel demand substantially in 3Q10.

 

Of individual applications, thanks to the increasing demand during China National Day holiday and for the year-end hot season, LCD TV panel demand from downstream TV customers continued to increase. In addition, since the profitability level of TV panel was better than that of IT panel, panel makers hoped to expand LCD TV panel shipments to compensate the loss from IT panels, which stimulated LCD TV panel shipments to grow by 9.1% QoQ in 3Q10. IT panel shipments was affected by the inventory adjustment at downstream, leading to that notebook panel and monitor panel shipments fell substantially by 12.4% and 13.2% respectively. Netbook panel shipments fell by 15.7% QoQ because of the rise of tablets which slashed netbook demand at end market. On the contrary, benefitted from the booming sales of Apple iPad, panel makers continued to increase tablet panel shipments which soared by 90.3% QoQ.

 

WitsView indicated that since panel prices continued to fall, the pressure of financial loss extended among panel makers. Recently, in the wake of panel prices falling below the cash cost as well as the reduction of glass input, panel makers intended to stabilize the prices. Under the strategic manipulation, there were some panel makers having better chances to see the price rebound in some specific sizes in the market. However, the price rebound was not comprehensive, and the inventory problem still weakened the demand. Entering 4Q10, panel makers tried to improve the cost structure by asking for a 3~5% price reduction from upstream material suppliers. Additionally, panel makers must continue to cut input capacity to avoid the supply glut. With the upcoming of the year-end hot season, the sales performance at end market will become the key to determine whether the inventory will be effectively cleared away.