Analyst reiterates slowdown for LCD processing tools

August 22, 2007 – After a year of withholding investments in additional manufacturing equipment, LCD panel providers still seem to be in no hurry to buy processing tools even though panel prices are rising again and inventory seems back under control, according to data from the Information Network.

Despite rising demand for LCD panels used in TVs, notebook PCs, and desktop monitors, LCD makers are still keeping a tight rein on their capacity expansions with lean capex budgets, notes Robert Castellano, president of the analyst firm. Prices of 37-in. TV panels sunk by 30% between mid-2006 and Jan.2007, and “only in the past quarter have LCD panel prices rebounded,” he noted. Meanwhile, unit shipments for large-size panels continues to be hot, increasing 25% this year to more than 250 million units, Castellano predicts.

Market conditions appear to be unchanged from a previous report back in February. The worldwide market for array processing equipment for thin-film transistor liquid-crystal displays (TFT-LCD) is expected to sink about 14% in 2007, after dropping 11% in 2006 to roughly $4.64 billion. LCD makers had tried to offset slumping prices by cutting back utilization rates to as low as 80% (from ~95% in late 2006), and a slew of companies announced cutbacks in planned expenditures.

“What is significant is that prices are going up and inventory is being kept under control, but the LCD manufacturers are still not making any significant purchases because of the tightrope they are walking,” Castellano told WaferNEWS in an email exchange. He noted “muddled signs on the horizon,” most notably problems in the consumer-dominated US market such as housing, loans, and high gas prices, will continue to impact consumers’ discretionary spending, which in turn could dampen sales of LCD products.

Things will start to get better in 2008 for the overall LCD equipment sector, according to Castellano, who predicts a 28% rebound next year, followed by 8% growth in 2009.


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