Inventories of LCD-Based Products Increase, Spurring Price Reductions Tweet

Stockpiles swell above normal levels in China, but remain healthy in the United States.

Inventories of most electronic products using large-sized Liquid Crystal Display (LCD) panels increased in March and April due to slower sales of some older models and the arrival of new products from television and notebook PC brands, spurring a price reduction, according to iSuppli Corp.

Global channel inventories of televisions rose to 4 weeks in March, up from 2.5 weeks in January. For notebook PCs, inventories increased to 4.8 weeks in March, up from 3.5 in January. Inventories of monitors increased to 4 weeks in March, up from 2.5 in January. Most of these inventories are increasing again in April.

Even with the increase in inventories, stockpiles of LCD-TVs in the United States remain at normal to healthy levels suitable to support television makers’ efforts to clear out older models and to add new products to their product lines. However, channel inventories for televisions in China now equate to more than two weeks, higher than the normal level. This is leading to some cuts in panel orders and is resulting in a softening of panel demand in April, especially from China.

In the United States, television brands have been introducing new 3-D models. The price differential between equivalent-featured LED-backlit LCD-TVs and LED-backlit 3-D TVs has narrowed to as little to as little as $300, spurring consumer demand. Brands will continue to Introduce 3-D TVs globally through July.

Brands in the United States also continue to add new LED-backlit LCD-TVs. The number of LED-based LCD-TV models reached more than 140 in March, more than double the number of models in February.

While notebook PC shipments in the first quarter were down a few percentage points from the fourth quarter of 2009, shipments in the second quarter are expected to be flat due to the introduction of new models. Most brands are expecting a huge second half of the year given the continued economic recovery and the high adoption rate of Windows 7. Inventories of notebooks rose in the first quarter to meet this expected demand.

Monitor sales slowed in March following a strong start to the beginning of the first quarter, leading to an increase in channel inventories. The price increases witnessed during the first three months of the year for LCD panels are causing some concern among LCD monitor panel suppliers and OEMs.

Although panel suppliers are controlling LCD module inventory very closely, the slowdown of panel demand from China buyers raised the inventory level slightly. Panel suppliers are expected to quote flat to slight price reductions for April pricing as buyers have been unwilling to accept another price hike in the second half of March after already sustaining decreasing profits.

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