Over the past few months, TFT LCD panel makers have been controlling production to minimize inventories and reduce losses. Despite this, according to DisplaySearch, October loading rates experienced an increase to 75% from 68% in September.
The uptick in October fab loading rates mainly came from Korean panel makers, who increased loading to 84-85%, aiming to fulfill demand in October (the peak month in the year). The increase mainly stemmed from TV panel production to meet increased LCD TV orders for fourth-quarter 2011, especially for Samsung. In addition, both LG Display and Samsung are increasing shipments to Chinese customers, with consecutive monthly shipment growth in November and December.
Taiwanese panel makers also raised their fab loading rates in October, but are only at a 65% loading rate on average and plan to operate at the same level in the fourth quarter, reflecting the cautious outlook of their TV customers and a prioritization of finances over market share. Japanese panel makers are still struggling with inventory issues and have made further cuts in fab utilization for fourth quarter 2011.
Loading rates differ by fab generation, with 7-7.5G increasing to 86% in October, up from a record low of 76% in September, and 8-8.5G increasing from 64% to 72%.
Large-area panel shipments, particularly for LCD TVs, are likely to show a peak in October and decline by 2% on month in November before scaling down significantly at the end of the year.
The planned increases in panel shipments in October were encouraged by healthy sell-through results during the Golden Week holidays in China. There were hopes that TV sales in China would surge before the China home appliance subsidy program ended in late November, and that inventory rebuilding may be stronger than after Golden Week last year.
According to Deborah Yang, research director of DisplaySearch, "There is a risk of oversupply as loading rates are based on panel makers' sales targets and on optimistic expectations rather than on a realistic demand forecast." Yang added, "A decline in large-area panel shipments is forecast for December 2011 and January 2012, as the holiday demand will already have been met."
Source:digitimes