November 7, 2011 — Jerry Su and Jimmy Huang, research analysts at Credit Suisse, expect low LCD TV inventory levels in Asia to trigger an LCD panel buying spree in the near term to restock in time for consumer spending at Chinese New Year. Panel makers, as well as backend foundries and driver IC suppliers, will benefit.

Recent supply chain checks suggest Chinese TV makers are restocking panels as LCD TV inventory is now down to ~4 weeks after the October Golden Week Holiday (versus normal inventory level of ~5 weeks), which should trigger panel restocking demand in the near term for 2012 Chinese New Year holiday sales.

AUO and CMI, which account for about 55% of TV panel market share in Chinese local brands, will see a boost in orders, as may Novatek.

Figure. China LCD TV inventory down to ~4 weeks after Golden Week. SOURCE: Witsview, Credit Suisse estimates.

After an inventory overbuild in 2010, Chinese TV brands became more cautious about managing inventory in 2011. China LCD TV inventory reached ~6 weeks in July and August, but has now fallen below the normal level, triggering a near-term splurge on panels to restock for 2012 Chinese New Year consumer spending.

Driver IC makers and backend foundries are seeing rush orders recently for inventory restocking. Chipbond (6147 TT, NR), the largest gold bumping service provider globally, commented in its analyst meeting that it expects its 4Q11 revenue to remain flattish to up slightly on strong mobile device demand and rush orders triggered by inventory restocking from China TV brands starting from 2H October.