Swollen Panel Inventories Prompt Action - and Denial
by Ken Werner, Insight Media
May 31, 2006
Inventory of LCD panels at Chunghwa Picture Tubes, Taiwan's third
largest LCD manufacturer, increased 16% sequentially in the first
quarter of this year; at AUO it was 8.4%; at CMO, 44.8%; and at
LG.Philips LCD, a whopping 56%, DigiTimes reported this week,
citing data supplied by the companies.
Other sources cite poor sales particularly in Europe as a main
cause of the inventory build-up. With the Football World Cup about
to begin, many first and second tier brands put large inventories
of LCD-TVs in place in anticipation of a surge in buying.
Apparently, consumers have not gobbled up the LCD-TVs as fast as
anticipated.
While Europe is soft, there is a general feeling that sales of
LCD-TVs are soft globally as well.
Reacting to the problem, Hsiung Hui, EVP of AUO, the undisputed
market leader among Taiwan's remaining "four tigers," said panel
makers should reduce production to decrease inventory levels.
Previously, Hsiung noted that panel prices continued to fall while
panel makers continued to increase production and accumulate
inventory. If the panel makers maintain their rapid ramping of
capacity, he said, panel prices will fall further.
And they are. From March to April, prices of 32-inch LCD-TV
panels dropped at an increased rate of 7.3% to $481 and prices of
40/42-inch panels also dropped 7.3% to $879, according to
iSuppli.
So prices are down. Does that mean that shipments are up? No,
according to DigiTimes, reporting information from industry
sources. Specifically, shipments of over-30-inch TV panels from AUO
and CMO were flat from April to May. AUO's 32-inch shipments stayed
at 200K per month, while its 37-inch shipments dropped from 80K to
60K.
So, with inventory levels up, ASPs down and shipments soft, are
profits under pressure? You bet. AUO and CMO may see operating
margins in the single digits in 2Q, and JP Morgan predicts a
sequential profit drop of 40% at AUO and 63% at CMO......contd.
also hängt alles an den Verkäufen von LCoS HDTVs ab.......
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