Panic Panic Kill

The Korean panel plant's production capacity was fully opened, and the sales price of the panel makers was taken up, triggering a new round of panel price panic killing. The market adjustment agency DisplaySearch expects panel prices to fall more than expected, with the fastest two to three months. Panel prices will collapse to cash costs, causing panel makers to fall into serious losses.

The US Department of Foreign Investment reported on the 16th that the decline in panel prices since August was more than expected. The original panel maker believes that in September, when the demand for the peak season is approaching, the price may stabilise. At present, it seems unlikely that there will be stability, according to the current decline. Potential, low-margin IT panels may be the first to drop to cash costs.

According to Xie Qinyi, vice president of DisplaySearch, there are five major causes of this panel overcapacity, including: excessive inventory, brand factories want to improve gross margins, demand panel price cuts, weak Chinese market demand, too optimistic in the first half, leading to full production capacity, and Korean panel makers have caused price cuts and other factors.

Units such as AUO and Chi Meidian have reduced their production to ensure panel prices are stable, but Korean companies such as Samsung and Lejin Display not only did not reduce production, but actively used Taiwanese manufacturers to reduce production, so as to fight price wars. The active market share, especially the 32-inch TV panel, is even louder.

Xie Qinyi said that from the fall in August, the monitor panel dropped by 5% to 7%, the laptop panel dropped by 3% to 4%, and the TV panel fell by 4% to 5%. The average drop should fall between 3% and 4%.

According to industry insiders, the panel's price drop is both fast and large, not a downward revision of the general panel price, but a panic crash. It is expected that the panel plant's revenue and shipments in August will still continue to decline compared to July, as panel makers expect to ship in the third quarter, which will still grow by about 8% from the second quarter, which means shipments in September. A substantial leap forward must be achieved before the goal can be achieved.

However, Xie Qinyi pointed out that the faster the panel prices decline, it also indicates that the strength of the rebound will soon come, especially when the price drops to cash costs, resulting in a net cash outflow from the LCD plant, the panel factory will not re-production, inventory levels at that time On the low side, the price of the panel is very cheap, which will cause the economy to rebound quickly. It is expected that the fourth quarter will be a rebound point.