Pricing Drops for Small- and Medium-Sized Display Panels, but Market Set to Pick Up

30 April 2013

The small- and medium-sized display (SMD) panels used in mobile handsets and tablets saw their average pricing fall in February because of slow seasonal demand and inventory adjustments made by clients ordering the panels, but market activity is reviving this month as shipments start to climb, according to a Small and Medium Price Tracker report from information and analytics provider IHS.

Average SMD panel pricing inched down 1.06 percent in February to $17.68, compared to $17.87 in January. Pricing declined 1.07 percent in handsets to $15.73, while tablets retreated 1.03 percent to $46.41. The price decrease was expected to continue through March. However, a rebound in the China market-along with a boost in phone orders because of new models like the Galaxy S4 from Samsung Electronics-is likely to help stabilize pricing soon, IHS iSuppli believes.

Overall, shipments of SMD panels from South Korea and Taiwan in February amounted to 178.6 million units, down 14.7 percent from January as the market moved through its traditional slow season, with shipments declining as a result. Both panel suppliers and buyers spent the month clearing out inventories and making room for new models set for release in 2013.

The slow pace is expected to accelerate after March, however, as activity revs up in both the handset and tablet space.

In handsets, for instance, Samsung is preparing for the release of the Galaxy S4, which features a 5-inch, full high--definition Super AMOLED-or active-matrix organic light-emitting diode-display that Samsung says shows more vivid contrast and brighter images at high resolution. The phone, to be launched in retail in the second quarter, has already garnered substantial press as well as significant interest from consumers. A boost in smartphone display demand from new products like the Galaxy S4, is expected to help stabilize the mobile handset panel market, so that handset display pricing in March will decline by 0.94 percent, much smaller than the full percentage point decrease in February.

A second variable that will help drive SMD panel demand for handsets is the upcoming Golden Week festival in China, a semiannual seven-day national holiday. The event represents a time of increased shopping, and higher demand for consumer electronics is expected to help drive smartphone sales.

For the smartphone market in general, a vigorous push in the market for larger displays will drive brands to showcase panels in the range of 4.x inches or greater for their latest smartphone lines. The growing impetus for larger displays will benefit SMD panel suppliers, allowing them to maintain higher-value displays in their handset display portfolios while also keeping utilization rates stable at fab production sites due to the increased area demand required by larger displays.

In the tablet space, both the low-end as well as the portable 7.x- and 8.x-inch segments are forecast to gain heavy traction among tablet white-box and branded original equipment manufacturers, as their lower price points win them popularity among consumers.

Among the big brands, Apple, Amazon and Google are all believed to be updating their 7.x-inch tablet offerings this year with enhanced displays featuring higher resolution, adding to the market momentum already enjoyed by smaller tablet display sizes.

For manufacturers, fab utilization rates are expected to rise in March as the market re-energizes. Rates are forecast to ramp up to 66 percent, up a couple of percentage points from February, on the way to an average of 70 percent in the second quarter because of the increased production of displays for new-model releases.

Read more >> Panel Prices Decline as SMD Demand Slows

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