Flat panel stocks down on falling prices of TV screen
CNATAIPEI -- Shares of flat panel suppliers generally ended lower Friday after the release of a research report the previous day that showed a drop in TV screen prices for first half of September from the second half of August, dealers said.
September 7, 2013, 12:03 am TWN
The prices of 32-50 inch TV screens fell US$2-US$7 reflecting inventory adjustments, according to the report by market advisory firm DisplaySearch.
The report has caused worry among investors that the weaker pricing power may hurt flat panel suppliers' bottom lines in the second half of the year, dealers said.
Shares of AU Optronics Corp. fell 2.15 percent to close at NT$11.40 (US$0.38), with 80.81 million shares changing hands, and shares of HannStar Display Corp. shed 2.76 percent to end at NT$12.35.
However, shares of Innolux Corp. closed up 0.34 percent at NT$$14.75 recovering from an early low of NT$14.50 on a technical rebound. The weighted index on the Taiwan Stock Exchange closed down 0.05 percent at 8,164.20 points.
“Inventory levels are high, mainly because China ended its one-year subsidy program for TV purchases on May 31,” said Hua Nan Securities analyst Stan Chang. “Falling demand for TVs in China has placed heavy downward pressure on product prices.”
DisplaySearch said global LCD TV demand is expected to remain weak throughout the second half of the year as China's subsidy program has ended. TV shipments in the second half of the year may account for only about 50 percent of the annual number, down from 60 percent in the past.
The average price of 30-inch flat TV screens fell US$2 month-on-month in the first half of September, 39-inch panels dropped by US$3, 40-46 inch screens by US$4, and 50-inch displays by US$7, DisplaySearch said.
Some flat screen suppliers have cut product prices in an effort to lower their inventory levels and gain a higher market share, according to market analysts.
“Under such unfavorable circumstances, flat screen suppliers' pricing power has been affected and many investors fear that the profitability of those companies will be squeezed as a result,” Chang said.
Chang said, however, that local flat panel suppliers are unlikely to swing to a loss in the second half of this year solely based on the current inventory adjustments.
“Buyers are expected to restock as demand picks up ahead of China's National Day holiday that starts Oct. 1,” Chang said. “The upcoming Christmas season will also help.”
“So flat screen stocks could find some technical support at around their current closing levels,” he added.
Meanwhile, DisplaySearch said the prices of screens for notebook computers fell US$.01 on average in the first half of September from a month earlier, while the prices of displays for desktop computers dropped US$0.1-US$0.3.