Taiwanese Small/Medium Display Shipments in Q2 Exceed 2008 Levels

While the second quarter was weak for almost all electronics segments, Taiwanese small/medium display suppliers are set to exceed their shipment levels from a year earlier, according to iSuppli Corp.

This signals a market pick-up in demand for handsets and other mobile devices. Demand from China, stimulated by government incentives, is continuing to rise at a healthy pace. Meanwhile, tier-1 handset makers are ordering displays in preparation for the third quarter and end-of-year demand season. Even some handset vendors based in Japan, the hardest-hit region during the present downturn, are planning to place orders from display makers in Taiwan.

Furthermore, the continued success of the Apple iPhone is driving market demand for competitive products. In addition, a great deal of work is going on at various OEMs to develop Android phones. Demand for smart phones also continues to be strong with many OEMs introducing higher-end, feature-rich phones.

The second-quarter increase came despite a slowing in sales in May compared to April. The decline was due to a shortage of components such as driver ICs and LCD glass.

Early indicators from the Taiwanese suppliers are pointing to a strong third-quarter performance. The third quarter is usually the strongest period of the year, as panels are shipped to meet the end-year holiday demand for electronic devices. However, it seems unlikely that shipments in the third quarter of 2009 will grow at similar levels as compared to the third quarter of 2008. The good news is that pricing declines will be kept under control due to a number of factors, including:

* Stronger-than-expected end demand
* Component shortages
* Limited capacity expansions

While some handset display panel prices have stabilized in China�s white-box market, continued strength in demand is leading some suppliers to implement increases in handset module display prices of up to 5 percent to 6 percent in the second quarter of 2009 and continued pressure on prices in the third quarter.

iSuppli expects that Taiwanese panel makers supporting the Chinese market and those focused on the tier-one OEMs, including AUO, are likely to perform well in the third quarter.