LCD TV Manufacturers React to Slower Demand
Manufacturers maintain plant capacity at 85 percent utilization, backtracking on previous predictions of a strong fourth quarter for LCD TV sales.
Price increases for large-area thin-film transistor (TFT) LCD panels halted in mid-June due to an uncertain demand outlook for the third quarter of 2011, according to DisplaySearch.
In its MarketWise-LCD Industry Dynamics report, DisplaySearch indicates that demand is slowing, so manufacturers are making adjustments to plant capacity to prevent drastic panel price fluctuations.
Panel makers originally expected to raise capacity utilization - the ratio of actual output to total available capacity - to an average of 90 percent in Q3 2011. However, as indicated in the study, capacity utilization will remain at 85 percent from July to September.
The capacity level for LCD previously fell early in 2011 and rose to its current level in Q2 based on market conditions.
“As TFT LCD panel makers became aware of weakness in the market, they changed their Q3’11 fab utilization plans in an effort to maintain light inventory and control production, in the hopes of stabilizing panel prices, especially now that global TV brands have encountered sales challenges in some regions,” says Deborah Yang, research director for DisplaySearch. “Reducing capacity rates reflects the trade-offs panel makers must make between over-supply and falling prices on the one hand, and increased depreciation costs at low utilization rates on the other.”
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