Samsung Electronics Hints at Reducing Production
A possible plan by Taiwan’s Chi Mei Optroelectronics to cut liquid crystal display (LCD) production might be the latest confirmation that demand in the global flat-screen market has failed to meet earlier expectations.
The outlook for Korean LCD panel suppliers will likely deteriorate further in the coming weeks as well because of slow end-demand caused by the U.S. economic troubles, slumping TV sales in China and even record oil prices, analysts say.
Prices of such panels used in products ranging from mobile phones and computer monitors to televisions are expected to fall further in the latter half of July, dragging down companies’ earnings in the traditionally strong second half.
Kwon Young-soo, chief of LG Display, has recently suggested the possibility of cutting its panel output if market conditions worsen significantly.
``Output cuts are possible and may be used as an opportunity to clean up the facilities and improve yields,’’ Kwon told reporters weeks ago, adding the outlook for the market remains bleak.
``If TV demand is healthy, there will be a shortage of IT panels from mid-August or September,’’ Kwon said.
``If the TV market continues to remain poor, IT panel prices could stabilize in September after a sizable fall in July and August.’’
Taipei-based AU Optronics, which trails LG Display and Samsung in the global LCD panel market, is also monitoring its inventory and admits the possibility of cutting production if supply exceeds demand.
Samsung Electronics and LG Display, the world’s No. 1 and No. 2 LCD panel suppliers, respectively, are now faced with excess stock because of difficulty finding buyers for the panels they expected to supply to small- and mid-sized TV makers, forcing them to sell the components at big discounts.
Analysts say escalating price competition in North America over large LCD TVs is also dragging down the global panel market, increasing the possibility that prices will be depressed until summer, when TV makers customarily start to procure panels for new models to be released in the year-end holiday season.
Echoing this cloudy outlook, Samsung Electronics is considering cutting the output of its LCD production, though no official decision has yet been made.
``We expect the downtrend to extend into August, however, the price decline will be less severe as the demand for LCD panels is still strong capitalizing on larger TVs,’’ a Samsung official told The Korea Times, Monday.
``We are watching the situation, and cutting a small portion of our LCD production is slightly possible,’’ the official said, without elaborating further.
Although none of the LCD panel suppliers have yet to firmly fix their possible production cut plans because of ``market share,’’ however, the fall may slow as possibilities have been raised to start cutting production by larger Korean and Taiwanese panel makers
