Low LCD Inventories Can't Keep Up with Growing Demand

Not exactly a long time after LCD manufacturers and suppliers decided to reduce their LCD inventories because of weak demand, general prices dropped under the actual manufacturing cost of the products. Noticing this, monitor clients placed in an unexpectedly high amount of orders, effectively catching by surprise most display makers that predicted a weak fourth quarter.

This development comes after, at the beginning of the month, LCD panel makers decided to cut their inventories significantly, hoping for a price increase that would stabilize their budget. Now, however, it seems that things may have gone in a completely different direction, with their best chance of increased revenues (namely, selling more monitors) on the verge of being missed.

Digitimes reports that, besides the obvious advantage of buying monitors for less than their actual value, some of those customers have ulterior reasons for increasing orders and practically placing panel makers in the position of having difficulty when trying to meet demand. The reason in question is the decision of Chi Mei Optoelectronics' customers to diversify their panel supplies.

CMO's customers decided to shift their orders away from the panel maker because of the company's announcement that it would be merging with Innolux Display during the following year. With the strong competition provided by Innolux in the liquid crystal display panel market, monitor customers are starting to pay closer attention to the offers of AUO Optronics (AUO) and Chunghwa Picture Tubes (CPT).

To prevent similar situations from occurring in the laptop and TV markets over the next year, notebook manufacturers have already started to secure LED supplies for mobile LCD screens in advance. The actual total amount of LED-backlit LCD TV shipments is expected to grow six times in 2010, reaching over 30 million units. Notebook LCDs are expected to outgrow TVs, with an estimated increase in shipments of 50%. Notebook shipments are expected to reach about 160 million, out of which 80% are set to use LED backlit LCDs.