LCD Panel Shortages Possible in Q2, 2011

It appears that things may be getting a bit complicated up ahead for the LCD market, as certain makers of LCD panels are worried they may not be able to keep up with the possible demand surge in March and beyond.

Like other IT industry fields, the liquid crystal display panel segment seems to be in for possibly troublesome times.

While it is the DRAM market that is going through the biggest ASP decline phenomenon, LCD makers share different fears.

According to a recent report published by Digitimes, TFT-LCD panel makers based in Taiwan are worried about possible labor shortages in January and February.

Normally, this would not be too big a concern, but it is believed that demand will significantly increase during March.

If reduced labor prevents the makers from amassing a sufficiently high supply, shortages will most likely be an issue during the second quarter of the ongoing year.

For the short terms, demand will probably slow down because of various events, like the snow storms in Europe, the floods in Australia and the still uncertain economic situation in the EU and the US.

Indeed, during December, monitor panel shipments fell by 2.3 percent sequentially, while 12.1-inch and larger notebook screens sold quantities 4.3 percent less than during November, 2010.

November was actually a favorable month, from a certain point of view, because panel makers boosted utilization rates in order to meet market demands.

This very same type of increase in utilization rate of their factories is exactly the sort of tactic that the likes of AUO and CMI are currently enacting.

Should they fail to reach the inventory levels they wish, panel prices may go upwards once demand exceeds supply, two months or so from now.

Nevertheless, whether to not consumers will have such a thing to worry and possibly complain about is something that remains to be seen.