Besides causing damages to Innolux’s Gen-5 and Gen-6 fabs, the earthquake is expected to have reduced the capacities of other production facilities in the affected area by about 5~10% for the month. WitsView anticipates that the supply disruption resulted from this earthquake will cause sharp price fluctuations in the panel market in the short term. The price trends will return to their normal patterns in March, when panel fabs in Taiwan resume normal operation after repairs.

Among the large-size applications, TV panels were affected by the earthquake the most. Innolux is the world’s sole supplier of 39.5-inch TV panels, which are made in its two Gen-6 fabs. With the earthquake damaging one of these two Gen-6 fabs, Innolux’s clients switched to larger panels such as the 40- and the 43-inch to avoid supply shortage. This shift in TV panel orders has in turn strengthened and stabilized the prices of mid-size products in the 39.5- to the 43-inch range.

Innolux is also the leading supplier of the 50-inch TV panels, and the earthquake did cause slight damage to its Gen-7.5 fab that produces this product. Nonetheless, the average price of the 50-inch has fallen this month as well, albeit moderately by less than US$5. This limited decline was caused more by the earthquake’s psychological effects on the market than by the reduction of supply.

The earthquake did not disrupt the supply of TV panels sized 32, 49, 55 and 65 inches, so the weak overall demand and lackluster sales of TV sets during the Chinese holidays are still the overriding factors in their pricing during February. The average quoted price of the 32-inch has fallen close to US$50 this month, while the 49- and the 55-inch have also dropped by US$6~8. The decline for the 65-inch are expected to be much greater, perhaps by around US$10~15 at the end of February.

The earthquake did not directly affect the monitor panel production, but Taiwanese suppliers suffered losses in their monitor panel inventories and have shifted some of their capacities originally for monitor panels to make TV panels. In the short term, the supply will be tight for monitor panels sized 18.5, 21.5 and 28 inches.

However, prices of the 18.5-inch and the 21.5-inch products will still drop by US$0.5~1 in February since the main suppliers of the 18.5-inch are based in China and there are many panel makers capable of filling the 21.5 orders. The price competition in the larger size segments (the 23-, the 23.6- and the 27-inch) have been fierce, and these products will see a drop of around US$1 this month as well.

Innolux’s Gen-5 fab, which devotes half of its capacity to notebook panels, suffered serious damages during this earthquake. Nonetheless, WitsView expects the slumping notebook demand plus the high inventory level to continue exert a greater downward price pressure on all notebook panels in spite of the impact that the earthquake had on their supply.

For this month, the 14-inch and the 15.6-inch TN panels with HD resolutions have seen moderate price decline of about US$0.4~0.5, whereas the average price of FHD notebook panels has fallen by US$0.7 as these products expand their presence in the market. The average price of 17.3-inch TN monitor panels with HD resolution has also fallen by US$0.5~0.6 this month on account of limited demand.