Demand for LCD panels fell off in the second quarter of this year, leading to an uncharacteristic oversupply scenario, which is expected to continue throughout Q3. But market watcher iSuppli has predicted that demand will rise again by the end of the year.
The analyst found that although there was an increase in large LCD panel unit shipments of 17 per cent over Q1, it still fell short of expectations. This spurred a 6.4 per cent oversupply of panels and led to a series of price reductions as vendors and VARs scrambled to clear stock.
The situation is likely to continue throughout this quarter with the expected opening of eight new fabrication plants. Supply might slow in Q4 but the researcher has claimed the market will be flooded in 2005.
In its quarterly Global LCD Supply/ Demand Forecast, iSuppli said: "We believe the current panel price decreases will boost end-user demand for LCD panels by the holiday season at the end of this year.
"This, accompanied by the cuts in supply that some suppliers have announced, will result in a situation of slight undersupply in Q4 2004, before the industry settles into a period of oversupply throughout 2005."
Mike Farrah, senior business manager for audiovisual and displays at Ingram Micro, said: "We went from constraint in Q1 to oversupply in Q2. All the vendors have had quite a lot of stock and the only way to get rid of it is to cut the price.
"Prices on 17in panels have fallen by 15 to 20 per cent. In Q1, a 17in panel cost dealers £250; now they can pick one up for £170.
"On 15in and 17in panels prices will be fairly steady over the next few weeks. The main drop will be seen on 19in and 21in panels. Manufacturers are much more efficient at producing these sizes now."
Panel prices on LCD TVs fell sharply during Q2 but iSuppli maintained that consumer prices are still not low enough to boost demand significantly.
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