LCD Fab Utilization Rates Increasing

Improving Utilization Rates According to DisplaySearch, worldwide TFT LCD fab utilization rates have been increasing since January, which was the month that posted an all-time low utilization rate of 50%. The utilization rate improved to 62% in February and increased again to 69% in March. The Austin, Texas based market research firm is expecting the rate to improve to 79% in Q2’09.

Excess Capacity There is still considerable excess capacity due to record CAPEX in 2008 for adding LCD production capacity. The rate of capacity expansion has slowed and LCD manufacturers are pushing out equipment purchases, deliveries and installs. Ramping up LCD fabs has slowed down as well. All of these activities should bring the LCD market closer to supply and demand equilibrium in 2H’09 according to DisplaySearch. The LCD market directly depends on end-user demand for LCD goods. With the US economy continuing to struggle there is no guarantee that 2H’09 will be good for companies involved in the LCD suppy chain.

China The economic stimulus package has boosted demand for LCDs, especially for those that are manufactured from Taiwan-based LCD suppliers such as AU Optronics (AUO) and Chi Mei Optoelectronics (CMO) and geared toward LCD TV applications. This has had a positive impact on fab utilization rates. The added demand from China has had a stabilizing effect on decreasing panel prices. The potential market for LCD goods in China is enormous, which should have a positive impact on the overall LCD market now and in the future.

Source: EETimes

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