Expectation for Performance in Second Quarter Is Positive
Prices of LCDs and panels for 32-inch TVs finally rebounded after 15 months. Prices of 40-inch panels also stopped decreasing and have started to increase. There is a high chance that LG Display and Samsung Display’s LCD businesses, which recorded losses in first quarter due to decreased prices, will be able to make early turnarounds in LCD businesses.
According to market research companies’ SNE Research and Witzview’s materials on the 21st, prices of LCD panels for TVs stopped decreasing and transaction prices became stable starting from April as prices of all 32-inch and 40-inch models started to increase. As it is predicted that prices of LCD panels are starting to increase, there is positive mood throughout panel industries on their performance in second quarter.
According to their reports on average prices of LCD panels for TVs in April, price of HD-level 32-inch panel increased by a dollar (1.9%) at $53 compared to previous month. Prices of 40-inch, 43-inch full HD, 43-inch UHD panels also increased by a dollar.
Downward trend of prices of 50-inch and 55-inch panels stopped as they maintained same price as average prices in March.
However price of UHD 65-inch panel, which is a premium product, fell by $5 from previous month at $335. While price of 49-inch full HD product only decreased by a dollar, range of reduction for UHD products was bigger as price of UHD products decreased by two dollars.
Reasons why downward trend of average prices of LCD panels is starting to slow down are because set manufacturers are starting to get rid of stocks of panels that had been piling since last year for release of new TVs and increased purchase of panels. Although Chinese panel manufacturers constantly increased amount of supplies of panels, selling price actually is beginning to increase again as demands for TVs have increased due to promotions from major countries and sport events such as Olympics and others.
Fact that panel manufacturers adjusted operation rate of their facilities in January and February and decreased output of entire 32-inch and 40-inch models, which have big range of price reduction, also helped prices rebound. As amount of supplies decreased and demands for panels increase, prices of panels have become stable again.
Actually operation rate of LCD production lines of global panel manufacturers stayed at average of 80% in first quarter of this year. According to a market research company called IHS, average quarterly operation rates that had remained between 87% and 91% until third quarter of last year fell to 85%, 82%, and 79.9% in fourth quarter of last year, January of this year, and February of this year respectively and fell under 80% for the first time since 2013.
Reduction of demands from set manufacturers of entire 32-inch and 40-inch models due to earthquake in Taiwan, reduction of supply from Samsung Display due to a problem regarding yields from production lines and other problems partially affected operation rates.
Stock industry is expecting that stable LCD price and rebound of prices of certain products will have positive effects on performance of LG Display and Samsung Display.
However fact that panel manufacturers increased percentage of production of 65-inch premium UHD panels to increase their profit ratio will become a variable in securing profits in the future because transaction price is continuing to decrease as corresponding TV markets are not growing fast.
Industries are predicting that prices of panels will remain the same or gradually increase. They are expecting that if transaction price recovers, it will have positive effects even on performance of panel manufacturers.
However there are still some worries regarding oversupply of large products such as 50-inch or higher products.
Staff Reporter Bae, Okjin | withok@etnews.com