Major TFT-LCD panel makers are expected to see significant drops in profit in the third quarter of 2010 compared to the second quarter due to weaker-than-expected demand, as well as lower utilization rates and panel prices.

Looking into the fourth quarter, overall panel prices will continue to drop and panel makers are expected to see profits decline further as demand worsens.

AU Optronics (AUO) is scheduled to hold its investors conference on October 27, while Samsung Electronics and Chunghwa Picture Tubes (CPT) will both hold theirs on October 29. Chimei Innolux (CMI) will not hold an investors conference for the third quarter as the company has decided to hold investors conferences every six months.

Due to significant decreases in LCD panel prices in the third quarter, some IT (notebook and monitor) panel segments saw prices drop below cash cost levels and further sent panel makes adjusting their utilization rates. Due to support from their brand business, Korea-based panel makers had higher utilization rates compared to Taiwan-based makers. LG Display's utilization rates in the third quarter remained at 90-94%, while Taiwan-based panel makers' utilization rates dropped to 60-70%.

In terms of profits, AUO has issues a profit warning for the third quarter, and market observers expect AUO and CMI to break even in the third quarter. CPT and HannStar Display will continue to see losses in the third quarter.

Looking into the fourth quarter, although panel makers are trying to stop IT panel prices from dropping further, it will take some time for panel makers to reach agreements with clients. As for TV panels, prices will continue to drop in the fourth quarter, but the decline will be slower compared to the third quarter.

Overall demand for LCD panels will hit bottom in the fourth quarter of 2010 and will start to rebound in the first half of 2011.