Weak TV panel demand to limit growth of LCD makers: UBS
July 22, 2014, 12:02 am TWN
TAIPEI -- UBS Securities warned Monday that a limited growth in television panels may cap revenue increases for two leading Taiwanese flat-panel makers in the third quarter of 2014.
The Swiss brokerage firm said in a research note that day that overall TV panel shipments in the July-September quarter are forecast to decline by single digits from the second quarter.
Aggregated TV panel shipments from AU Optronics Corp. (AUO, 友達光電) and Innolux Corp. (群創光電), two leading Taiwanese LCD makers, grew by 20 percent sequentially in the second quarter of 2014, outpacing the normal quarterly growth of 5-10 percent, UBS said.
“In our view, that indicates customers (of AUO and Innolux) already pulled in some demand ahead of the (FIFA) World Cup, creating a high base effect for the third quarter of 2014,” UBS analyst Samson Hung wrote.
He forecast a 4 percent quarter-on-quarter revenue growth in the third quarter for both firms because TV panel shipments are likely to grow moderately during this quarter and offset the growth in middle and small panels.
Hung maintained a cautious stance on Taiwan's TFT-LCD sector and has downgraded his rating on AUO to “sell” from “neutral.”
The analyst also maintained his “sell” rating on Innolux and gave “neutral” ratings for display driver IC suppliers Novatek Microelectronics Corp. (聯詠科技) and Chipbond Technology Corp. (頎邦科技), as well as for contract chip-maker Vanguard International Semiconductor Corp (世界先進).
Shares of AUO ended down 2.16 percent at NT$13.60 (US$0.45) in Taipei Monday. Innolux shares fell 0.66 percent to NT$14.95.
Large-sized Panel Shipments Rise in June
Global shipments of large-sized panels rose in June, driven by growing demand from makers of tablet computers and televisions, a local flat screen research institute said Tuesday.
June shipments totaled 71.78 million units worldwide, up 3.4 percent from the previous month, said Taipei-based WitsView in a research note.
Jeffy Chen, a research manager at WitsView, attributed the increase in July to strong demand for tablet panels, which jumped by a monthly 16.2 percent to 21.06 million units, making up a huge chunk of the total large-sized panel shipments.
In addition, steady demand for TV panels, coupled with rising panel prices, led vendors to restock their inventories with various sizes, he said.
TV panel shipments rose 0.6 percent month-on-month in June to 20.95 million units, according to Chen.
Panels for laptop computers, meanwhile, slid 3.1 percent to 16.29 million units, while those for LCD monitors dropped 1.4 percent to 13.48 million units, the report showed.
The research institute predicted that total large-sized panel shipments will decline 6-8 percent in July on slower procurement by China-based vendors.
Shipments of all categories of panels will drop, with those for LCD monitors and laptop computers likely to show the sharpest decline of some 10 percent each, Chen predicted.
Panel shipments for TVs and tablets will also decline by a monthly 3-4 percent and 7 percent, respectively, he forecast.