03 September 2004 03:10 [Source: ICIS news]
SINGAPORE (CNI)--DisplaySearch, a US consultancy and research company that specialises in the liquid crystal display (LCD) market, expects shipments of large LCD panels to fall in the third quarter compared to the previous quarter due to a large build-up in inventories.
DisplaySearch said that despite record shipments in the first half of 2004, significant growth in LCD monitor and LCD monitor module inventories had worsened the outlook for the remainder of the year. The consultancy said that the major LCD monitor makers had significantly boosted supply in the first half creating an excess of around 3m units in the second quarter.
Several major Asian commodity chemical makers have invested in LCD material production as a way to diversify their businesses, with many companies investing heavily in LCD-related materials such as methyl methacrylate (MMA), polycarbonate (PC) and speciality films.
Although LCD producers have continued to ramp up capacity, meaning continuing rising demand for LCD materials, the supply glut issue is seen as a growing risk.?xml:namespace>
Given the inventory problem and traditional seasonal weakness, DisplaySearch expects monitor panel shipments to fall 10% in the third quarter from the second quarter. Panel suppliers are rapidly reducing prices to try and stimulate demand, with the average prices for blended LCD monitor modules expected to drop 14% in the third quarter, it said.
The consultancy is expecting a 23% quarter-on-quarter decline in LCD monitor module revenues in the third quarter, and a 14% decline in total large-area thin-film-transistor LCD (TFT-LCD) revenues.
On a year-on-year basis, revenues are expected to be up 32% in the third quarter. However, because of supply-related downward price pressure, the revenue outlook for the fourth quarter has weakened. DisplaySearch said fourth-quarter revenues are expected to remain flat or decline slightly, despite the expected holiday-related pick up in sales by volume.
However, the consultancy said that the price declines would likely accelerate LCD monitor penetration next year, producing a stronger 2005 outlook.
DisplaySearch warned of the growing supply glut in its analysis of first-half LCD shipments released earlier this week.
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