LG Display Panel Output at 90% of Normal For Now

LG Display, one of the largest LCD manufacturers in the world and based in South Korea, announced on September 3, 2008 that it would keep its panel production at 90% of normal for now. Demand for LCD goods have been less than expected due to various macro economic conditions. Back to full production was planned in September, but LG Display is maintaining its 10% reduction that it initiated back in late July.

We are entering a critical period where retailers are preparing for Q4, when times are usually much better than the rest of the year. It takes quite some time to execute a major sales and marketing plan to showcase OPP products, product promotions, financial promotions, etc. throughout the vast country that is the US. Prices for goods such as LCD TVs have continued to decline rapidly. Rapid price declines are not merely the result of reducing the cost of manufacturing and the general trend toward shrinking margins. No, the price declines are almost directly related to a declining demand for LCD goods. Back in Q1 and Q2 all major LCD manufacturers as well as major suppliers such as Corning were happily reporting that everything was great and even announced record revenues and shipments. Well, what they didn’t know, thanks to a very long supply chain, was that LCD demand was consistently declining, especially in the US.

“This (economic) worry has been with us all year and each month we still see consumers buying televisions. We cannot guarantee they’ll continue to do so, but we are encouraged by the resiliency of television purchases in the United States.” This remark was made by a CFO at one of the largest company participating in the LCD industry in the US and was made in late July. Guess who? Jim Flaws, CFO at Corning. I really do wonder what he was looking at each month. If he would only share.

What is going on now? There is still inventory. You want to keep the LCD factories humming along? Prices need to come down more. Not because they are expensive but because there are simply less people who can afford large TVs. The US is roughly 30% of the world’s market for LCD TVs. Here in the US, unemployment rate is rising, consumer confidence isn’t so good, housing prices continue to decline, gas, food and other energy prices are still at record levels.

Corning took a big hit because its data sources suggested that everything was going well. If a CFO of a major company can say something so off as “each month we still see consumers buying televisions” while the opposite is true, it is time to revamp your market research. Get access to as many sources of information that tells you sell-through data in the US. DisplayBlog offers monthly sell-through intelligence. Let me know if you’re interested by emailing me at jin@displayblog.com

Source: Reuters

[tags]LG Display, LPL, LCD Manufacturer, Display Manufacturer, Market Research, Market Intelligence, Corning, US Sell-Through, LCD TV[/tags]

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