Last week, it took some dedicated scratching for me come up with a few optimistic stories from and about LCD panel makers. That task is easier this week. Panel makers are making serious adjustments to accommodate to changing global markets, but those adjustments are not only reductions in capex and manufacturing capacity. Indeed, some of the changes anticipate recovering prices and demand.

Ken Werner
Senior Analyst and Editor

First, a negative story that appeared on the web last week turns out to be not true. That story, based on an errant slide in an NEC Corporate financial report, incorrectly stated that NEC LCD Technologies, an NEC subsidiary that makes industrial displays, was getting out of the LCD manufacturing business. In fact, it is only NEC LCD Technology’s Kagoshima plant that will be closed by the end of this year. In a wide-ranging discussion, Omid Milani, Director of the Display Business Unit for NEC Electronics America, told me that the closing of the 360×465mm (Gen 2) line at Kagoshima, NEC LCD Technology’s oldest, will not affect the company’s overall production capacity after some of the equipment now at Kagoshima is integrated into the company’s plant at Akita. Production will be consolidated at Akita, which currently has a 370×470mm Gen 2 line and a 550×650mm Gen 3 line. The Gen 2 line at Akita is flexible, and can be used to make LTPS products.

A company press release said staffing at NEC LCD Technologies will be reduced from 1190 to 600 by the end of March, 2010. NEC LCD Technologies President Toshihiko Ueno, said, "Our worldwide business strategy remains unchanged and with the current restructuring we expect to further strengthen our competitive position in the market. There will be no disruption to the supply of existing products and the company will continue its new product and technology development plans, such as 3D and electronic paper technologies." Milani emphasized the relative stability of the industrial display business, that often involves multi-year supply contracts and multi-year product life cycles. There is plenty of capacity to honor all existing commitments, and to fulfill orders from new customers, he said.

Elsewhere in the industry, prices of most monitor panels continued to rise in the first half of March by a dollar or two, after bottoming in December and January, according to the latest edition of DisplaySearch’s PriceWise report. Notebook panels became even more intimately acquainted with the low price levels they reached in December, while 26- and 32-inch LCD-TV panels started to rise. (But larger LCD-TV panels — 37 inches and over — continued to decline, as did PDP-TV panels.) Mobile handset display prices started to climb; smaller netbook displays stayed put, while 10-inch-class netbook displays continued to fall.

CMO sales and marketing VP Chen-Lung Kuo predicted a recovery for notebook panel shipments in Q2. He noted that monitor- and TV-panel shipments have already seen shipments increase, primarily because of China’s consumer electronics stimulus program. Orders from the U.S. are stable, he said, while European orders are weak. He predicted that some panel prices might even increase to above the cash cost of manufacturing them!

Samsung is reportedly using its 8G line to supply the surge in demand for monitor panels used in Samsung’s own monitors, as well as those with Dell decals on them.

AUO announced a sequential 16.7% increase in revenues for February. The company seems to be encouraged by this, although the February revenues represent a 63.9% decrease on year. February shipments of 10-inch-and-larger panels were nearly 4M units, up 23.6% sequentially, helped by some rush orders. Shipments of small/medium panels were more than 14M units, up 45.4% sequentially.

PDP module shipments were up 8% sequentially to 1.04M units in January, according to DisplayBank.

Finally, equipment suppliers say that AUO and CMO are thinking about resuming equipment installation in their Gen 7.5 lines now that some orders are recovering and utilization rates are increasing, report Nancy Cheng and Yvonne Yu in DigiTimes.

There are lots of reasons why the price and shipment increases could be one-month wonders, followed by a bit more contraction and another few difficult months. But we seem to have hit bottom. Sitting at the bottom of a pit for a while may not be pleasant, but at least it means we’ve stopped falling.