HannStar and CPT may stop supplying 7-inch analog panels if prices fall below US$20

Susie Pan, Taipei; Rodney Chan, DIGITIMES [Monday 30 June 2008]

Both HannStar Display and Chunghwa Picture Tubes (CPT) may choose to stop supplying 7-inch panels if prices fall too below, and will shift the capacities to producing applications for low-cost notebooks (netbooks) and monitors, according to company executives.

Market rumors have indicated that the weak market for digital photo frames has sent 7-inch analog panel prices falling below the critical level of US$20, which panel suppliers consider to be crucial for maintaining profitability for the segment.

Chih-Hao Chou, vice president of HannStar's Small and Medium Size Panel Business Center, said the company's 7-inch analog panels are still quoted at above US$20. If prices for 7-inch analog panels do fall below US$20, HannStar would rather choose not to take orders for the segment, he said.

Chou said as HannStar has only one 5G line, it may shift even more capacity to cater to robust markets such as low-cost notebooks and monitors.

Chou maintained that although HannStar has lowered its shipment forecast for medium-sized panels, its 5G line is still running at full capacity as more capacity has been devoted to meet strong orders from the monitor segment.

Despite the overall sluggishness in the panel market, HannStar still expects its profits to grow sequentially in the second quarter.

Chou's remarks echoed those previously made by SC Lin, vice president of CPT's small- to medium-size TFT business.

With strong demand coming from the low-cost notebook market, which is shifting to larger-size 8.9- and 10-inch panels, Lin said there will be more options for orders for medium-size panels. The company would rather choose not to take orders of 7-inch panels if the quotes become too low, he said.

Both HannStar and CPT said if there are indeed 7-inch analog panels currently available at prices below US$20, they must be isolated cases where the suppliers may be trying to clear their inventories of panels of special specifications.

Prices for 7-inch analog panels shot up to US$30 in 2007 amid tight supply. But this year increased supply, particularly after HannStar started using its 5G line to produce medium-size applications in the second quarter, has sent prices for the segment crashing, observers said.