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Monday, July 31, 2006

LCD Market

By William Trent, CFA of Stock Market Beat

The good news is that companies are seeing the light and cutting back on planned capacity expansions.

CMO to delay equipment installation at 8G plant, say sourcesFurthermore, the lower prices are starting to spur some demand. On their recent earnings conference call, tech reseller CDW Corporation said:
Continuing the recent trend, average selling prices of large format LCD monitors have declined significantly year over year. The more affordable prices havedriven unit volume.

The bad news is that some manufacturers continue to pour on the capacity. Sharp will invest 500 billion yen (about US4.26 billion) to build a tenth-generation (10G) TFT LCD plant, with construction to begin in the third quarter of 2007 and volume production to begin in mid-2008, according to the Japanese-language Nihon Keizai Shimbun. The plant will process 2,850×3,050mm glass substrates into eight 57-inch panels or six 65-inch panels.

Prices are now expected to fall a further 25% by year-end for some categories:
The ASP (average selling price) for a sixth-generation (6G) substrate is expected to drop to 14,000-15,000 yen (US$119-128) by year-end, according to the Chinese-language Economic Daily News (EDN).

First-tier makers are now offering prices for a 6G substrate at 20,000-19,000 yen while prices from second-tier makers are about 22,000-23,000 yen, the paper indicated citing sources as saying.

Other news:
The currently tight supply of 19-inch monitor panels will ease by September, when supply will have increased at panel makers, according to assistant general manager Gatti Park at LG Taiwan, as quoted by the Chinese-language Apple Daily.

Samsung Electronics sustained profitability for its LCD division in the second quarter despite weak LCD TV sales, inventory pile-ups and an ASP (average selling price) reduction while LG.Philips LCD turned to losses during the period. There are several factors that contributed to Samsung’s success, including an earlier ramp up at its seven-generation (7G) LCD plants and strong support from downstream LCD TV brands.

Taiwan liquid crystal display panel maker AU Optronics Corp. said its second quarter net profit dropped nearly two-thirds because of steep price declines.

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