Photo Courtesy: China Daily. It’s an old but telling picture (2007) of a little boy attracted by large LCD TVs.
China LCD TV demand from China is having a huge impact. Industry sources are saying that due to the strong demand from China for LCD TVs, LCD panel prices will continue to increase through June. The demand increase is largely affecting AU Optronics (NYSE: AUO) and Chi Mei Optoelectronics (TPE: 3009), two of the largest LCD suppliers in Taiwan. Other LCD suppliers such as Samsung, LG Display (NYSE: LPL), Sharp, etc. are still cautious about a global recovery for LCD goods.
25 Million LCD TV sales in China was originally expected to hit 18 to 20 million units in 2009. That number has now increased by up to 25 percent from 24 to 25 million units. This boost in LCD TV demand from China should have a positive impact on companies that are related to AUO and CMO’s supply chain such as suppliers for LCD glass, backlight units, optical films, LED chips and integrators.
Fickle Demand Brands will need to watch out for rising prices since that will erode profit margins on products they sell. If LCD panel prices rise too much brands will be forced to raise prices or eat profits in order not to dampen demand that is already fickle.