Flat panel display (FPD) market research and consulting firm DisplaySearch has released Q3'04 results and forward-looking projections for the large-area TFT LCD and PDP markets in its Quarterly Large-Area TFT LCD Shipment Report and Quarterly Plasma Display Panel Shipment & Forecast Report. These reports revealed that large-area TFT LCD shipments and revenues declined after an extended period of record results while PDP units and revenues continue to set record highs. The reports also reveal potential concerns regarding supply constraints in the second half of 2005.
In the case of large-area TFT LCDs, the streak of seven consecutive quarters of record unit shipments and five consecutive quarters of record revenue results finally came to an end. Unit shipments dropped two percent Q/Q, as expected, as the anticipated 10 percent decline in LCD monitor module shipments more than offset nine percent growth in notebooks, four percent growth in LCD TVs and 22 percent growth in other applications. LCD monitor module shipments fell due to a prolonged period of price increases in a price-elastic market, generating inventories of more than three million panels and LCD monitors in Q2'04.
The decline in large-area units along with healthy growth in capacity caused the seasonal large-area TFT LCD surplus to jump from three percent in Q2'04 to 15 percent in Q3'04, resulting in tremendous pricing pressure.
Although record unit shipments are expected in Q4'04 and Q1'05 due to lower prices stimulating demand, the ASP declines should outweigh the unit growth, resulting in continued declines in revenues.
While the surplus narrowed to 10 percent in Q4'04, it is expected to widen in Q1'05 on seasonal weakness. Despite the larger surplus, the rate of ASP decline is expected to slow in Q1'05 to five percent due to the faster than expected declines in Q3'04 and Q4'04 and the fact that prices for most 14in-17in panels are already below cost for most suppliers.
Other data from the report included:
- Notebook module shipments rose nine percent Q/Q.
- LCD monitor module shipments fell 10 percent in Q3'04, as expected, while rising 24 percent Y/Y to 17.6 million units due to excessive inventories created in Q2'04.
- LCD TV module shipments grew four percent Q/Q and 125 percent Y/Y in Q3'04, seven percent faster sequentially than predicted, to three million units. LCD TV panels are expected to rise 11 percent Q/Q and 61 percent Y/Y in Q4'04 and 6 percent Q/Q and 52 percent Y/Y in Q1'05.
In terms of overall supplier performance, Q3'04 was down for nearly all suppliers with only Hitachi, Sharp and Toppoly enjoying sequential revenue growth. For the publicly traded large-area TFT LCD suppliers revealing detailed financial results on their TFT operations earnings dropped 68 percent, gross margins fell from 34 percent to 17 percent, and net margins declined from 28 percent to 12 percent with further declines expected in Q4'04.
With capacity growing at double-digit levels from Q4'04 to Q2'05 and costs falling from improved panelization and lower cost electronics architectures, pricing pressure will continue resulting in a strong market outlook. As panel prices fall and PDP TV prices become even more attractive, demand growth is expected to outstrip supply growth in the second half of 2005, resulting in much tighter supply conditions.
For more information, visit www.displaysearch.com.
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