LCD Market: Supply/Demand Balance Remains Out of Whack

iSuppli raises 2007 LCD TV panel shipment forecast:

Research firm iSuppli Corp. said on Wednesday it had raised its shipment forecast on panels for LCD televisions by 3 percent to 75.2 million units globally this year, as falling prices boosted fresh demand. The unit shipment would be up 42.7 percent from 52.7 million liquid crystal display [LCD] panels shipped last year, iSuppli said in a statement. That was also higher than 72.9 million units it forecast in the fourth quarter of 2006. The price of a 32-inch LCD-TV panel is expected to fall 17 percent in the first half of 2007 from the fourth quarter of 2006, iSuppli said.

The sales forecast is probably as good as any, but the key question for investors is whether the supply growth will be in line with demand growth. Too much supply means lower pricing even with strong demand. The fact that prices are expected to fall 17% in the first half (typically tech prices decline about 20% per year) suggests the supply/demand balance remains out of whack.

Comments

[phwting]

The first line of the article that is NOT quoted reads

"Rapid price reductions are boosting sales of large-sized Liquid Crystal Display Televisions (LCD-TVs), prompting iSuppli Corp. to increase its forecast for LCD-TV panel shipments in 2007"
www.isuppli.com/news/d...


A more balanced story about supply and demand is at

www.displaybank.com/en...
"Looking at future demand on a square meter basis, although all TFT-LCD investments in progress will be put into practice, the sharp increase in demand will highlight an additional investment of $60 billion from 2008 through 2011.

The prediction is on the assumption that Samsung's seventh and eighth-generation (7G and 8G) expansion plans and LG.Philips LCD's 7.5G project will be all put into practice. Notwithstanding the involvement of the supposition that Sharp Corp. will be successful in boosting its 8G capacity to 70,000 units monthly by the end of 2008, the industry will not keep pace with the upward trend in demand for large-format LCD panels without an additional investment in 2008 and beyond."

[WilliamTrent]

If stocks were valued on a price/square meter of product shipped basis, or on the basis of price/unit sales I would consider those statistics relevant and quote them. Since stocks are more typically valued on the basis of <strong>dollar&l... sales or earnings, the dollar revenue and "falling prices" seem more relevant.