Reports: LCD Brand Inventories Piling Up

By Greg Tarr -- TWICE, 1/20/2011

New York - Video display industry analysts DisplaySearch and iSuppli issued separate reports Thursday showing a buildup of LCD panel inventory by major brands and the potential for a resulting slowdown in TV production for the first quarter of 2011.

DisplaySearch, which just released its MarkeWise-LCD Industry Dynamics report, said that supply levels at LCD manufacturing fabs returned to mostly healthy levels after December, but "there are still concerns about high inventory for brands. DisplaySearch found that TV, monitor and notebook PC brands are holding medium (4-5 weeks) to high (more than 6 weeks) supply chain inventories. This explains the brands' restrained production plans in Q1'11."

DisplaySearch  said that panel makers' inventories were back to healthy levels at the panel production fabs, and on average, TFT LCD inventories, defined as finished modules held by panel makers, are down to 7-8 days for TV panels, 6-7 days for monitor panels and 5-7 days for notebook PC panels, which are all manageable levels for panel makers.

In addition, panel prices, especially LCD TV, are stabilizing because there is little inventory pressure pushing panel prices down.

In the U.S., Q4'10 sell-through was positive, mainly for CCFL models, but not all brands benefited, DisplaySearch said.

"Most brands are still facing high inventories for LED-backlit LCD TV models. In Q1'11, brands will put more focus on promotion of LED-backlit LCD TVs before new models come on line in March," the DisplaySearch report stated.

In other findings, DisplaySearch said panel makers plan for large-area panel shipments to trend down in January, with a 2 percent decline month to month, and TV panel shipments will drop the most, falling 9 percent month to month.

In December 2010, 60 percent of Samsung LCD's TV panel shipments were to Samsung and Sony, and 45 percent of LG Display shipments were to LG Electronics and Vizio.

Meanwhile, new research from the IHS iSuppli LCD Service on the large-panel LED-backlit LCD market found that despite strong growth in shipments of LED-backlight products, "the large-sized panel market in 2011 faces the specter of oversupply, which could result in falling prices."

The firm said that based on an analysis of the current production plans of panel suppliers, manufacturing capacity may significantly exceed market demand in the first half of 2011.

However, capacity expansion in the second half of 2011 may decrease to a lower level than demand.

"If panel suppliers can control production skillfully and rationally, 2011 can be very positive year for the LCD industry," said Sweta Dash, IHS iSuppli LCD research senior director. "On the other hand, excessive production in the first half may lead to an inventory buildup and oversupply in 2011."

The El Segundo, Calif.-based firm went on to say that more than two-thirds of large-sized LCD panels shipped worldwide in 2011 will incorporate LED edge and backlighting, up from less than one half in 2010.

An estimated 67 percent of large-sized LCD panels will use LEDs in 2011, compared to 44 percent in 2010. Global shipments of large-sized LCD panels with LED backlighting will reach 495.6 million units in 2011, up 74.9 percent from 283.3 million units in 2010.

LED penetration in television and monitor panels will rise to slightly less than 50 percent in 2011, up from about 20 percent in 2010.

By 2014, shipments of large-sized LCD panels with LED backlights will reach 834.6 million units, growing at a compound annual growth rate (CAGR) of 47.9 percent from 117.8 million in 2009, iSuppli said.

IHS defines large-sized LCDs as panels with a diagonal dimension of 10 inches or larger.

"LED-backlit panels have emerged as the main driver of large-sized LCD panel shipment growth in 2010, representing the fastest-expanding-and soon to be the largest-portion of the LCD market," said Dash. "Consumers increasingly are demanding LED-backlit televisions as the costs of such sets decline, allowing more users to take advantage of their superior image quality, lower power consumption and thinner form factors."