According to the latest surveys conducted by WitsView, a subsidiary of Trendforce, large-sized panel shipments fell by 8.2% MoM to 52.23 million units in Jan11. As the year-end hot selling season drew to a close, the arrival of the traditional weak seasonality prompted downstream clients to reduce their panel procurement. In addition, the weaker-than-expected sales performance during the year-end sales promotion also weakened their willingness to replenish their respective inventory. These two factors were the key reasons behind the monthly shipment drop in Jan11.

 

Amid seasonality factors, including the end of the year-end holiday selling season in the US and Europe and the Eco-point subsidy program drawing to a close in Japan, TV panel shipments have begun to weaken in 1Q11. Despite demand stemming from the scheduled launch of new Spring models, the panel supply continues to be disrupted by the labor and raw material shortage that is still being experienced by some panel makers. Impacted by the weak seasonality effect and tight supply conditions, TV panel shipments fell by 11.3% MoM in Jan11. In the IT segment, as clients finish their inventory replenishments, and the fact that there appears to be no evident end market demand, monitor panel shipments also grew weaker, falling by 3.3% over Dec10. Finally, in terms of the NB panels, demand has gradually surfaced for the newer NB platforms. However, as the inventory of the older models still await to be digested, along with designs flaws that have been discovered in Intel’s new Sandy Bridge chipset, panel shipments of the above 12.1” declined by 7.1% MoM. Meanwhile, in the mini-notebook portion, it plummeted by 13.2% MoM.

 

In 4Q10, as mentioned before panel makers began to notably raise their respective utilization rates. In 1Q11, even though demand from downstream clients has weakened, panel makers continue to maintain relatively high utilization rates.  Based on WitsView’s assessment, this can be attributed to the following reasons. From a cost standpoint, if the production is sharply cut, it could cause the panel cost to rise too high. Amid anticipations that there will be no substantial panel price drops in 1Q11, panel makers are maintaining current outputs to avoid running the risk of dealing with overly high panel costs, which would further impact their profitability. In terms of supply, some panel makers are in the middle of conducting equipment upgrades on their existing lines. As further fine-tuning is needed in increasing the yield rates, some of the downstream clients have transferred their orders to other panel suppliers. This had helped hold up the panel demand in the short-term for some players. As a matter of fact, the rush order effect has also created a temporary labor and raw material shortage. However, it should be noted that once the manufacturing process upgrades are completed, with no strong end market demand expected in the near future, the supply side may come under heavy pressure. By then, panel makers may be forced to scale back production in order to maintain a better balance in the market supply and demand and hopefully stimulate a market rebound in the near future.