According to MIC (Market Intelligence Center), an ICT industry research institute based in Taipei, in the third quarter of 2007 the worldwide supply of large area TFT-LCD panels will fall short of demand by 3%, but the shortage is expected to be alleviated in the fourth quarter. Due to low inventory levels in the supply chain in the first quarter and anticipation of a possible supply shortage in the second half of the year, some vendors advanced panel delivery in the second quarter of 2007, which is not a traditional peak season.

Although the fourth quarter is a peak season in the end-market, shipment volume of TV panels is expected to be concentrated in the period from August to November, owing to their longer manufacturing process and the logistics time required for transportation to sales destinations.

With the advent of the off-season in the consumer market in the first quarter of 2008, shipment volume of models for consumer applications is expected to dip slightly, returning the inventory level back to normal. However, with limited new panel capacities in 2008 and continuing growth in demand for panels of various applications, strained supply will occur again in the third quarter and continue into the fourth, with the supply shortage ratio reaching 13% and 3% respectively.

Supply of notebook PC panels remained at a healthy level in the second quarter of 2007, and supply is expected to remain sufficient in the second half of the year. In the third and fourth quarters of 2008, notebook PC panels are expected to see a shortage of 9% and 16%. It is projected that LCD monitor panel supply will see a shortage of 7% and 15% in the second and third quarters of 2007 respectively, with this shortage expected to hit 15% and 13% in the third and fourth quarters of 2008. There is expected to be no shortage in the supply of LCD TV panels in 2007, although supply will still be strained in the third quarter, a peak season for panels of various applications. In the third quarter of 2008, a shortage of 13% is projected.

After experiencing continuous declines in gross margin due to oversupply in 2006, TFT-LCD (Thin Film Transistor-Liquid Crystal Display) panel makers have become conservative in capacity expansion, with new capacities focusing on 6G, 7G/7.5G, and 8G panels for use in TV production. Meanwhile, in addition to turning 3.5G and older capacities into production of small- and medium-sized panels, Taiwanese and Korean makers have increased the ratio of small- and medium-sized panel production in their 4G/4.5G lines.

In view of the longer time required for the construction of next-generation production lines and the enhancement of their capacities and yield rates, new capacity plans announced by panel makers in 2007 are expected to make little contribution to the overall panel capacity in 2008.

More information can be found in the following MIC reports: Worldwide Large Area TFT LCD Panel Supply and Demand Forecast, 2007 - 2008

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