Rebecca Kuo, Tainan; Jackie Chang

 

Panel makers continued to generate profits lower than market expectations in the second quarter. It is likely such conditions will continue throughout the year into the first half of 2012. The year-long losses might be comparable to the losses incurred during the financial crisis in 2009.

The disappointing second quarter revenues reported by Samsung and LG Display indicated the possibility for panel makers to incur losses for the entire year until the first half of 2012.

Demand continues to be weak causing downstream vendors to make careful orders to control inventory. The price of large-size panels continues to be flat. Taiwan- and South Korea-based panel firms have been lowering capacity utilization to maintain the price of panels. Growing demand from developing markets has not yet been able to cover the weak demand from developed markets such as US and Europe.

Market observers predict the price of panels to increase slowly in the third quarter as panel firms are controling the supply of panels by lowering capacity utilization rates. However, the possibility of generating positive profits is likely to disappear as condition of the market continues to be cloudy.

Panel makers are likely to decrease utilization rate below 80% in July. Rumors in the market have also indicated a possible delay of Samsung's investments in its 7.5G plant in Suzhou, China. In addition, the scheduled mass production of LG Display's second 8.5G plant is also likely to be pushed back. Hence, the oversupply condition might be eased for a short while.