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Thu, 24 Aug 2006 Prices for LCD TV and monitor panels are on the rise

Dan Nystedt

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Users looking for a new LCD (liquid crystal display) TV or desktop display could face higher prices in the coming months due to a recent sharp rise in demand.

The price of popular 17-inch LCD panels, the screen part of a monitor, rose 5.8 per cent in the first half of August, compared to the previous two weeks, and another 2.7 per cent in the second half of the month, according to WitsView Technology, an industry researcher.

The decline in prices for LCD TV panels, from 20.1-inch to 42-inch sizes, has also nearly been halted. The price of 42-inch panels declined 1.4 per cent, but the price of other sizes remained flat to slightly down, a huge improvement over the past few months.

Users may have become accustomed to rapid price declines such as the ones the market has seen most of this year. Between April and June, for example, the price of large-sized LCD panels used in LCD TVs fell by over a fourth, compared to the first three months of the year, according to WitsView.

Flicker

How the market has changed. Demand for new desktop PCs with flat displays, laptops, and LCD TVs normally picks up in the third quarter as people return to work and school after summer breaks and vacations. Stronger demand this year is being met by a slimmer supply chain, and that could mean prices will continue to rise.

"I think prices will go up in the third and fourth quarter," said Eric Lin, an analyst at Yuanta Core Pacific Securities in Taipei.

August is actually the first month LCD panel prices will rise after three straight quarters of declines for 17-inch panels, according to iSuppli, another market research company. The 17-inch size is considered a key type of panel because of its popularity in desktop displays.

The average price for 17-inch LCD panels will increase by 19 per cent in the second half of the year to US$123 from US$102 in July, iSuppli predicted.

Dim

For users looking for LCD TVs, iSuppli said prices will still mover lower, but not by much. Like other market researchers, it saw nearly stable to slightly lower prices for TV-sized panels, and that means there's little reason to put off a purchase to wait for better prices later in the year, because they won't be that much better.

In fact, there is more likely upside to prices than downside, analysts say. The price declines earlier this year prompted LCD panel makers such as LG.Philips LCD Co Ltd and AU Optronics Corp to announce plans to reduce production in order to avoid losses. A number of panel makers also revised their capital spending plans for this year and next year to take into account the weaker prices.

Analysts believe the companies will expand production again as prices rise, which should help meet demand. But LCD panel makers will likely be very conservative about building new factories after being burned by the rapid price declines earlier this year, meaning prices will likely continue upward despite added capacity.

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