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IHS: LCD Panel Price Increases On The Way

 El Segundo, Calif. –
Despite TV sales performance called “feeble” for the month of June by market
research firm

IHS iSuppli

, large-format
LCD panel manufacturers are expected to start asking for slight price increases
heading into July.

The research firm said the increases are being assessed as “companies
rebuild their inventories to serve as insurance against supply disruptions
related to the Japan disaster.”

IHS iSuppli said televisions, monitors and notebook computers
using large LCD screens will likely see a 0.2 percent increase when final
numbers are tabulated, the first time all three applications have experienced
an increase in 14 months dating back to April 2010.

For June, all three applications for large-sized LCD panels are
expected to post slight increases, rising 0.1 percent for desktop PC monitors,
0.2 percent for televisions and 0.5 percent for notebooks, IHS iSuppli said.

This contrasts with previous months when pricing increased in
only one or two of the panel applications — while prices in other areas fell
steeply, dragging down the overall average.

“Consumer demand for the major products using LCD panels, like
televisions and computers, remains weak, especially in the United States and
Europe,” said Sweta Dash, senior director for liquid crystal displays at IHS.
“Despite this alarming sales situation, pricing is on the rise for all of the
major LCD applications with panel buyers replenishing their stockpiles in order
to build buffer inventory, in case of further supply disruptions spurred by the
Japan disaster, and as panel suppliers reduced utilization rates to control
production. This is driving up pricing for panels in all major applications.”

Buyers still are purchasing panels to mitigate the risk of any
shortages of components used to make LCD panels following the Japan quake
disaster in March, iSuppli said. Japan is a major source of production of
components for use in LCD panel manufacturing.

 Retail buyers are also increasing
LCD purchases in preparation for the summer and back-to-school seasons,
generally periods of hot activity for the market.

Despite this, some major brands continue to report high channel
inventory, IHS iSuppli said. This is preventing the price increases from rising
higher in June and keeping them at moderate levels during the month.

The primary concern at present for the LCD market remains the
sluggish state of demand among consumers in the United States and Europe, with
several branded vendors lowering their second-quarter sales targets.

“The weak end-market demand remains a distressing sign for future
panel pricing. Several panel suppliers had planned to return to their full
factory utilization rate in June as they were still receiving stable-panel
demand,” IHS iSuppli said. “However, several brand vendors have lowered their
second-quarter sales targets.”

The firm said one sign of potential trouble is that panel
inventory replenishment efforts in China could slow in July, prompting panel suppliers
to cut utilization rates of their fabs in June.

“Panel demand from international brands in particular will be
critical to support panel pricing in the second quarter of 2011 and in the
third quarter of 2011,” IHS iSuppli said.

The film expects total large-sized LCD panel inventory in June to
stay at approximately 30 days, following a 5 to 10 percent increase in demand
during May.

Among individual panel applications, notebook panels will show a
slight price increase in June as branded vendors start ramping up production
plans to meet annual and semiannual financial reporting periods.

Panels in tight supply include the 14-inch screen size, owing to
an upside in demand from China and the rest of Asia.

Demand continues to lag for the 15.6-inch because of slow demand
from the U.S. and European markets.

For television panels, inventory is being controlled successfully
by panel suppliers, iSuppli said.

Television panel demand in June is expected to grow about 10
percent compared with May, in anticipation of the hot selling season to come.

“For international brands, any increase in panel pricing will
have to be borne and accepted, especially for models based on the older
backlighting technology of cold cathode fluorescent lamp (CCFL), the precursor
to the newer light-emitting diode (LED) technology in more advanced panels
today,” IHS said in a statement.

In monitors, price increases are expected to slow in June after
having climbed 0.4 percent during each of the last three months. Pervasive weak
demand continues to hobble the sector.