TFT LCD panel price erosion has continued in the fourth quarter this year, due to the weak economic outlook and slow demand. Panel prices are approaching the cash cost of panel makers for products including 14.1-inch widescreen and 15.4-inch widescreen notebook PC panels, as well as 17-inch SXGA, 19-inch WXGA+ and 22-inch WSXGA monitor panels, and 32-inch HD and 42-inch full HD TV panels, according to DisplaySearch.
For example, panel prices for 19-inch WXGA+ in the fourth quarter this year are forecast to hit US$74, which is lower than the total cost of US$94 and the cash cost of US$79 for panels made on 7G or 7.5G production lines, so panel makers will be selling at a negative profit margin.
In the case of a 32-inch HD panels, the materials and components account for 69% of the total panel cost. Among the materials cost, backlight accounts for the largest portion, at 23%; color filters account for 19%, polarizer 10%, glass 10%, and liquid crystal 6%. DisplaySearch research indicates that these five key parts are still the focus of the panel makers, and as a result they are aggressively changing the panel design structure and asking materials suppliers to reduce prices. Materials costs for the fourth quarter are expected to fall by 3% on quarter for notebook panels, 4% for monitor panels and 5% for TV panels. On the other hand, the fact that some 5G and 6G fabs in Taiwan and Korea are fully or partially depreciated will help to improve panel cost structures.
According to Yoshio Tamura, senior vice president of DisplaySearch, TFT LCD panel makers face negative operating profits when panel prices are lower than the total cost. When the price approaches the cash cost, panel makers will suffer from cash out difficulties and take necessary steps to cut production and reduce capacity utilization. Despite this, the DisplaySearch believes that as long as panel prices approach the cash cost, further panel price erosion will be limited.
| TFT LCD panels prices, 4Q08 (US$) | |||||
| Application | TFT LCD panels | 4Q price forecast | Total cost | Cash cost | Manufacturing plant |
| Notebook PC | 14.1-inch 1280×800 | $64 | $66 | $56 | 5G |
| 15.4-inch 1280×800 | $65 | $77 | $63 | 5G | |
| LCD monitor | 17-inch 1280×1024 | $68 | $90 | $73 | 5G |
| $85 | $74 | 7G | |||
| 19-inch 1440×900 | $74 | $94 | $77 | 5G | |
| $94 | $80 | 7G | |||
| 22-inch 1680×1050 | $99 | $125 | $106 | 7G | |
| LCD TV | 32-inch HD | $223 | $256 | $221 | 6G |
| $248 | $218 | 8G | |||
| 42-inch Full HD | $425 | $435 | $390 | 7G | |
Sources: DisplaySearch, October 2008
Article translated by Yvonne Yu
