WitsView indicates display product vendors have been reducing their panel purchases with their respective suppliers in order to force a greater general price concession from panel makers. However, vendors (Chinese or international brands) will be limited in their efforts to correct their panel purchases in the third quarter because they are also preparing for the traditional peak season. On the other hand, panel prices are starting to drop in face of two kinds of pressure – increasing price negotiations and rising channel inventories. WitsView therefore expects prices for panels of all sizes to drop very soon.

“Sensing that demands are slowing, panel makers have recently started to adjust their product mixes,” said Eric Chiou, WitsView’s senior research director. Panel makers have limited options, such as shifting notebook panel capacity to produce monitor panels, since notebook panels have the highest inventory level. Panel makers can also switch from producing for IT applications, which have the weakest demand, to producing TV panels.

Chiou added: “The market is being affected by oversupply pressure because industry’s overall capacity utilization rate is high and the Chinese panel makers have accelerated their capacity expansion efforts. Consequently, prices of IT panel will see further decline and the TV panels will not be able to maintain their prices.”

In July’s TV panel market, the 32-inch panel’s oversupply problem has grown instead of subsiding. Furthermore, the 32-inch end products are almost at their base prices. Vendors therefore have kept lowering their demands as they have difficulties maintaining profit.

According to WitsView, the average price decline for the 32-inch TV panel during this month has reached US$3~4. Quote prices remain relatively stable for panels sized between 40 and 43 inches. However, some products in these categories have seen their prices negotiated downwards by about US$1 this month. For 48- and 49-inch TV panels, their prices have fallen by US$2~3. Capacities for these two sizes continue to increase.

Moreover, vendors have slowed down their purchases because their existing inventories are sufficient. The price decline of the 48- and 49 inch panels has also affected the prices of the 50-inch panels, which have dropped by US$2 this month.

The LCD monitor shipments in the second quarter had a 0.4% dip compared with the previous period, and the room for shipment growth in the third quarter will be just between 4~6% since the coming peak season will be relatively weak. The supply of monitor panels will continue to increase and make the estimated average price decline in July greater than that of June. WitsView projects a decrease around US$2 on average for various-sized monitor panels.

Though July is the traditional peak season for notebooks, demands are not picking up. Some panel makers have shifted their notebook capacities to other applications, but this does not alleviate the inventory glut that is hurting the notebook market right now. The price decline for the mainstream 15.6- and 14-inch panels is expected to moderate this month as their prices are very close to the base.

The 11.6-inch notebook panels will continue its downward price trend owing to the constant market disruption by white-box module house that offer extremely low prices. WitsView estimates the 11.6-inch notebook panels to have an average price decline reaching US$1. As the oversupply problem continues, panel makers will be forced to choose between price and volume and their negotiations with product vendors will become more difficult.