Flat-panel display (FPD) market research and consulting firm DisplaySearch indicated in its latest Quarterly Large-Area TFT LCD Shipment Report that Q2'04 was another record quarter for both large-area (10-inch and larger) thin-film transistor (TFT) liquid-crystal display (LCD) units and revenues. Revenues surged eight percent quarter over quarter (Q/Q) and 90 percent year over year (Y/Y) to a record $9.9 billion. The record revenue results were driven by both increasing unit sales and rising per-unit prices – seven percent Q/Q and 48 percent Y/Y growth in units to a record 34.2 million, as well as a two percent Q/Q and 28 percent Y/Y increase in average selling prices (ASPs) to $290. The Q2'04 blended ASP was the highest since Q1'01 as tight supply conditions continued throughout most of Q2'04. Driving the Q2 results was double-digit unit and revenue growth in panels for LCD TVs, LCD monitors and other applications with only notebook panels seeing weakness.
While the 1H'04 produced record results, significant growth in LCD monitor and LCD monitor module inventories has worsened the 2H'04 outlook. After seeing reduced allocation through most of 2003, LCD monitor brands and OEMs acquired an excessive number of panels in the first half of 2004. While significantly boosting supply, they also increased prices due to their declining margins as panel prices continued to rise on tight supply/demand. Given the price sensitivity of this market, Q2'04 LCD monitor shipments declined while supply increased. As a result, DisplaySearch believes LCD monitor/LCD monitor module inventories in excess of three million units were created in Q2'04. In addition to higher street prices, also contributing to the slowdown was traditional seasonal weakness and the popularity of the $499 desktop PC bundled with 17-inch CRTs, which has gained share at a number of PC makers.
Given the inventory problem, elevated street prices, and traditional seasonal weakness, monitor panel shipments are expected to fall 10 percent in Q3'04. Panel suppliers are rapidly reducing prices to try and stimulate demand, with blended LCD monitor module ASPs expected to drop 14 percent in Q3'04. But the inventory problem is not expected to be resolved until Q4'04, resulting in a 23 percent Q/Q decline in LCD monitor module revenues in Q3'04 and a 14 percent decline in total large-area TFT LCD revenues. On a Y/Y basis, revenues are still expected to be up 32 percent in Q3'04. In Q4'04, although units are expected to rebound, unit growth is not expected to be sufficient to offset the continued weakness in pricing causing revenues to remain flat or decline slightly. On the other hand, the lower prices are expected to accelerate LCD monitor penetration in 2005, which will produce a stronger 2005 unit outlook.
In terms of shipments by application:
- LCD monitor module shipments grew one percent faster than anticipated in Q2'04 to a record 19.5 million units, up 11 percent Q/Q and 50 percent Y/Y. Fifteen-inch XGA maintained its 34 percent share while 17-inch rose slightly to 50 percent. The average diagonal remained flat at 16.7-inch, but should rise to 16.9-inch in Q4'04 on significant gains at 17-inch, 19-inch and 20-inch. The LCD monitor module share of total large-area shipments reached a new high of 57 percent in Q2'04 but should fall to 53 percent in the 2H'04. Samsung led this segment for a second consecutive quarter followed by LG Philips LCD and AUO.
- Notebook PC module shipments grew six percent slower than expected, falling five percent Q/Q while rising 23 percent Y/Y to 10.7 million units. The decline can be attributed to continued channel inventory problems resulting from excessive panel shipments in Q4'03. By size, 15-inch lost ground at all resolutions while 14.1-inch XGA and 15.4-inch wide panels gained ground. The wide share rose from 14 percent to 16 percent and is expected to jump to 25 percent in Q3'04 as interest in this category grows. While disappointing in Q2'04, the notebook module market has already showed signs of recovering, enjoying four percent growth in July with expectations of even stronger growth in August. The notebook module unit share reached a new low of 31.3 percent in Q2'04 but is expected to rebound to 35 percent in the 2H'04. Samsung continued to lead this segment followed by LG Philips LCD and Quanta Display.
- LCD TV module shipments met expectations in Q2'04, rising 23 percent Q/Q and 236 percent Y/Y to 2.9 million panels. Sharp drove the growth of this segment as it ramped up the industry's first sixth-generation fabrication facility, which is well suited to the 26-inch and larger LCD TV market. If Sharp's shipments were excluded, LCD TV module shipments would have risen 13 percent. The 26-inch and larger share rose from 24 percent to 28 percent on 46 percent Q/Q growth with 20-inch VGA remaining the leading panel with an 18 percent share. Sharp's LCD TV panel share rose from 24 percent to 30 percent and it was followed by LG Philips LCD and CMO. The average diagonal rose to 21.1-inch and is expected to reach 22.2-inch in Q4'04 as prices fall at larger sizes. In terms of total large-area shipments on an area basis, Samsung continued to lead as shown in Table 1, but lost ground to Taiwan suppliers ramping new capacity. LG.Philips LCD remained in second, also losing ground, with AUO and CMO gaining ground. Total shipments on an area basis rose eight percent to 2.85 million square meters.
Table 1. Large-area TFT LCD shipment share and growth by supplier (area basis)*
TFT LCD SupplierMarket ShareQ2'04 GrowthQ1'04Q2'04Q/QY/Y Samsung 23.5% 22.1% 1% 85% LG.Philips LCD 20.8% 19.7% 1% 48% AUO 13.2% 13.8% 12% 81% CMO* 10% 10.9% 18% 73% CPT 7.9% 7.6% 5% 113% Other 24.6% 26% 15% 42% Total 100% 100% 8% 64% *Includes IDTech
DisplaySearch's Quarterly Large-Area TFT LCD Shipment Report reveals each supplier's large-area unit shipments and revenues by application, size and resolution for Q2'04 and forecasts this data forward two quarters through Q4'04. Actual glass input and fab use by fab line are also included.
For more information, visit www.displaysearch.com.