The majority of demand for large panels arises from LCD monitor production, which accounts for roughly 60% of Taiwanese panel shipments. Approximately 30% of Taiwanese panel output is used for notebook PCs. Although China has been hit hardest by SARS, the majority of monitor demand is focused on CDT monitors; LCD monitors have thus not been greatly impacted. Notebook PC demand, however, has been steadily growing in China. As SARS fears curb PC purchases, demand for notebook PC panels have seen a sharp decline.

It is expected that further large-sized LCD panel capacity expansions will be limited in the second quarter of 2003: compared to the first quarter, second quarter input will only increase 105,000 units. With worldwide market demand for monitors and notebook PCs largely undeterred by SARS, second quarter LCD panel supply will remain tight, which is forecasted to result in the 8.8% growth of Taiwanese panel shipments.

The first quarter of 2003 saw demand for mainstream 14.1", 15", and 17" panel sizes outstripping supply. Given that these sizes account for approximately 95% of Taiwanese panel shipments, second quarter ASP is anticipated to see a 2% increase compared to the first quarter. Price increases combined with the climb in volume are forecasted to drive 11% growth in second quarter shipment value.

Improved yield rates and higher input at Taiwanese makers' fifth generation plants will likely sustain volume growth in the third quarter; however, price fluctuations will be highly dependent on fifth generation capacity expansion. As LCD monitors and notebook PCs are still foreseen to undergo steady growth in the third quarter of 2003, a drop in prices is unlikely.