Large-sized LCD panel pricing fell faster than expected last month, due to disappointing demand, rising supply and swelling inventories that created a near-term headache for suppliers, but also paved the way for stronger sales during Q4, according to iSuppli Corp.

LCD panels used in desktop PC monitors suffered the steepest declines, with pricing for 15-inch and 17-inch panels dropping by 18 percent to 19 percent in August compared to July, thanks to the rising availability of panels resulting from increased production at several new fifth- and sixth-generation fabs, in addition to slow monitor and TV sales in July and August, the firm reported. These conditions contributed to a buildup of LCD monitor inventory to the four-to-six-week level in the distribution channel at original design manufacturers and among panel suppliers. In order to clear out inventories, some desktop PC monitor makers have begun to offer aggressive prices for 15-inch and 17-inch models, iSuppli noted.

The average price of a 17-inch monitor panel reached $226 in August, while the low-end price declined to $205. By the October timeframe, the industry-average price for such monitor panels is expected to fall close to the $200 level. With the panel cost accounting for 65 percent to 75 percent of the total monitor cost, those prices can support a 17-inch monitor street price of $300 to $350, which iSuppli believes should give a boost to holiday demand in Q4.

The average price of a 15-inch monitor panel declined to the $180 level, and some low-end average prices were reported at $173. By October, the average price is expected to fall another 10 percent to 15 percent, which potentially could enable prices of less than $300 for 15-inch monitor prices, iSuppli predicted.

Prices for LCD panels of 20-inches and larger showed less price erosion, and declined by only 5 percent to 9 percent in August compared to July. However, those panel prices had already fallen by 10 percent to 15 percent during the period from the start of April to the start of July, leaving less room for declines in August.

For the first time ever, the average panel price for 30/32-inch LCD TVs in August fell below the $900 price point to $876. They are expected to decline by another 10 percent to 15 percent during the next few months.

Overall panel price reductions in Q3 will enable system manufacturers to cut their rates in Q4, boosting holiday demand, iSuppli predicts. This could help the panel suppliers to achieve greater pricing power in Q4.

Another factor that will lead to stronger pricing is the effort by panel suppliers to cut their production and to lessen their utilization, the firm said. Strong demand for monitor panels will resume in Q4, driven by lower street prices and by increases in holiday sales. Because of this, supply and demand will return to equilibrium, or a tight supply situation will reemerge, iSuppli said, adding that there even may be increases in some panel prices in December as manufacturers strive to improve their profit margins after the major declines in Q3.

The real price decreases that will stimulate a significant increase in demand are not expected until the second half of next year when many more new sixth- and seventh-generation fabs will begin ramping up volume production, resulting in lower pricing, the firm concluded.

By: DocMemory
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