WitsView: Increasing number of firms enter Tablet PC market; 12.1” and below panel shipments bucks trend and rises by 8% MoM
Based on the latest survey by WitsView, a research division of TrendForce, the aggregated large-sized panel shipments dropped to 56.88 million units during Dec10, down by 2.4% MoM. As 2010 drew to a close, downstream clients performed stricter inventory adjustments during the year-end. Meanwhile, due to the severe winter storms that swept across the northern hemisphere, the traditional Christmas sales performance was weaker than expected. This caused downstream clients to be more conservative in their pull-in from panel makers. Following the huge jump in panel shipments during November, signs have appeared that growth has started to slow.
Since 4Q10, as the IT panel prices hit bottom, panel makers aggressively increased their utilization rates to meet the market demand, which resulted in the IT panel shipments to increase during Nov10. However, due to the weakening momentum in the inventory replenishments and growing pressure to control the year-end inventory levels, monitor and NB (above 12.1”) panel shipments respectively fell by 2.3% and 4.3% MoM in Dec10. Although TV panel shipments were supposedly being supported by preparations for the upcoming Chinese Lunar New Year and launch of new Spring models, the efficiency improvements that were being conducted by some panel makers on their production lines dragged down shipments. In Dec10, instead of the originally expected flat growth, they instead fell by 4.6% MoM.
Amid high expectations that the tablet PC market will see strong growth in 2011, brand vendors aggressively prepared for the launch of related products in an attempt to get a bigger piece of the pie. Shipments of the below 12.1” netbooks and tablet PCs both experienced an increase over Nov10. Specifically, the below 12.1” netbook shipments rose by 12.8% MoM. Much of the growth was attributed to the market launch of many related tablet products by Tier 2 and 3 budget brands, thereby boosting shipments of the 10.1” panels. At the same time, aside from the development of the 9.7” iPad panel, panel makers also started to produce in small numbers tablet PC panels with wide-viewing angles features. As the panel size range has started to extend to the 7” and 10.1” segments, it helped drive up the tablet PC panel shipments to grow by 1.3% MoM.
Table: TFT-LCD Panel Shipment in Dec-10 (K units)
Soure: WitsView
Although panel makers rapidly increased their utilization rates after 4Q10 in response to IT panel prices hitting bottom, the weaker-than-expected sales performance during the traditional hot season has rendered downstream clients to change their mindset in the way they purchase panels. Based on WitsView’s observations, the current IT panel pull-in is not being triggered by the end market demand. Instead, it is the strategic planning of downstream Sis or brand vendors in view of their respective inventory levels and assessment of the current panel price trend. This is why panel prices have not gone up simultaneously with the notable panel shipment growth, where it still lies at the cash cost level. Meanwhile, even though the TV panel demand is being stimulated by preparations for the upcoming Chinese Lunar New Year holidays, the momentum is expected to become more sluggish after 1Q11. Once demand for TV panels slow down, it will likely negatively affect the IT panel supply and price trend. Thus, it is worthy to pay attention on how panel makers adjust their current respective utilization rates. From a supply standpoint, as the depreciation costs of below G6 lines has dropped significantly for the major panel makers, they will have more flexibility in adjusting their utilization rates. In terms of demand, as downstream clients have not yet substantially lowered their subsequent demand forecast, panel makers are still holding a wait and see attitude regarding their panel capacity allocation. Nevertheless, after 1Q11 oversupply pressure may unfortunately reemerge again. If this occurs, it is suggested that appropriate utilization rate adjustments be made in stabilizing the market.
