Falling prices and weak demand expectations for large-area TFT LCD panels have caused panel makers to adjust their second-half 2011 production strategies. As panel prices approach cash cost, panel makers are reducing capacity utilization. According to DisplaySearch, global TFT LCD glass input peaked in second-quarter 2011 at a record 14.2 million square meters per month.

However, global glass input will be reduced to 12.2 million square meters per month in third-quarter 2011, a 14% drop on-quarter, and 5% growth on-year. As the market outlook is still unclear, panel makers are planning to maintain input at 12 million square meters per month in fourth-quarter 2011.

Glass input area for all three of the major applications for large-area TFT LCD - desktop monitor, TV and notebook PC - fell by double digits, with on-quarter declines of 19%, 13% and 17%, respectively, resulting from the current low panel prices and an unclear outlook on market demand. Panel makers intend to decrease mini-note PC production while increasing tablet PC panel production, so this category is flat quarter-on-quarter.

According to Shawn Lee, a senior analyst for DisplaySearch, "We have seen very different results this quarter. While panel makers planned to raise utilization rates to 85-90% in third-quarter 2011, they are now projecting only 75%."

Lee added, "In the past, there was always a gap between planned glass input for TV applications and planned TV panel shipments, since panel makers wanted to keep a surplus to meet any sudden demand, but our latest check indicates that the total second-half 2011 TV glass input area is very close to the planned area of TV panel shipments. This is an indication of how conservative panel makers are about the TV market."

Lee also noted "As panel prices approach cash cost and panel makers reduce panel inputs, short-term tightness cannot be ruled out, as some brands have promotions planned for the coming holiday season. We may see spot deals and short-term increases in glass inputs in third and fourth quarters."

All manufacturing generations are falling by double digits in third-quarter 2011 except 10G, which had a relatively low utilization rate in second-quarter 2011 due to the earthquake in Japan, and is now focusing on production of large TV panels. 

Source:digitimes