LCD Inventory: Mountain High

Some industries never learn. No matter what happens in life, in the LCD industry the second quarter is always the weakest. It doesn’t matter if there is a World Cup or the Olympics, Q2 is weak and much weaker than the other three quarters.  The LCD industry had a decent Q1 and thought Q2 would be just as good, so LCD manufacturers continued to pump out millions of LCD panels for LCD monitors, notebook PCs and LCD TVs to name a few. It really isn’t the stupidity of just the LCD makers, the customers of LCDs, the Dells, HPs, Sonys, Samsungs, Hitachis, etc. are all at fault for being less-than adequate in looking toward future trends. All of the sudden, Q2 rears its head and retailers like Best Buy tell HP that they need to take stock back. HP then turns to LG.Philips LCD and tells them they need to reduce panel procurement and in return LG.Philips LCD leans on HP hard to negotiate a long-term-agreement (LTA) so that both prices and quantities are stable. Other suppliers are not so lucky. Most of them have stockpiles of LCDs in their fabs and module plants. The integrators, mostly in Taiwan, also have stockpiles of LCDs. The only way to get these out the door is to slash prices and that’s just what some have been doing. It’s terrible for the LCD guys, but great for us consumers. Just wait until about a month when 15″, 17″ and 19″ drop about $50 each to never-before-seen low prices advertised at Best Buy. Back to the stupidity of some of these LCD guys: Q2 is weak. Remember that for next year so you can prevent a situation like this where you have inventories mountain high and have to slash prices to keep them moving. Don’t listen to Dell or HP and watch how their consumers behave.

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