14 DAY TRIAL // It appears that the semiconductor market is not the only one suffering from oversupply and low sales, as reports also reveal that the liquid crystal display segment is dealing with some issues of its own.
Price drops are always a welcome development on the IT market, as far as the customer base is concerned at least.
In truth, the suppliers of such products don't enjoy having to take such steps and do so only when they have no real or better choice in the matter.
One fairly radical example of oversupply causing serious price cuts is the way DRAM chips have been getting cheaper for many months now, with just a few episodes of slight recovery.
Granted, DRAM makers decided to stop letting prices go any lower, even though demand still hasn't picked up.
Now, it has been found that makers of displays are taking their own turn at trying to stabilize their assets.
In this case, however, instead of price cuts, companies are cutting back their production capacities and component orders.
AU Optronics, for instance, has reduced its glass purchases by 15% and intends to utilize only 80% of its production capacity in July, 2011 (the ongoing month). So far, it used 85% of its total.
Meanwhile, Chimei Innolux will cut its own production capacity from the current 90% to 80%, while Samsung and LG Display also intend to reduce theirs by 5%.
Chimei is, as some may or may not know, Taiwan's largest maker of TFT-LCD panels, but the problem behind dropping prices for such items is the oversupply plaguing panel distribution channels.
As for some extra irony, with the economy getting over the negative effects of the Japan disaster, there is no chance of shortages either, so companies really do need to make an active effort to cut back on their losses.