First-quarter 2011 shipments of large-area TFT LCD (larger than 9.1-inch) fell to 164 million units, down 7% on quarter, but up 5% on year. Revenues for the quarter were US$17.5 billion, falling 12% on quarter and 19% on year, according to DisplaySearch. LCD panel manufacturers are targeting an aggressive 18% shipment growth in second-quarter 2011, as panel demand increases due to low inventories in the supply chain and as capacity utilization rates gradually rise.

"The TFT LCD industry has been experiencing an over-supply for more than 12 months and Q1'11 is viewed as rock bottom of this cycle, a result of shipment declines, falling panel prices, and suppliers reducing capacity utilization rates due to a lack of orders and inventory reduction. Excess shipments of LCD TV panels in 2H10 were the major cause for such a long period of oversupply," noted David Hsieh, vice president of Greater China Market for DisplaySearch. "However, panel prices started to stabilize at the end of the quarter."

DisplaySearch research shows that the over-supply situation started to change at the end of March. Reflecting the tightness, the industry is experiencing price increases for several mainstream sizes. TFT-LCD capacity utilization is recovering, along with the panel price increases, and the aggregation of targets shows 18% sequential shipment growth for the second quarter.

Hsieh warned, "The forecasted 18% Q/Q growth in Q2'11 might be too aggressive because the current tightness is mostly resulting from supply constraints rather than strong demand. LCD panel manufacturers will need to see whether panel orders continue to increase based on optimism for the second half of the year."

All applications experienced on-quarter decline except public display panels, which were flat. Tablet and mini-note PC panel shipments fell 7% on quarter, LCD TV suffered the largest on-quarter decline of 13%, and LCD monitor panels fell by 5% on quarter. Since third-quarter 2010, prices for LCD monitor and notebook PC panels have been falling continuously, finally experiencing some stabilization in March. Due to component constraints and production issues, 9.7-inch tablet PC panel shipments declined on quarter, from 8.2 million units in fourth-quarter 2010 to 7.4 million units in first-quarter 2011.

On a revenue basis, all applications experienced on-quarter declines due to falling panel prices in first-quatyer 2011. LCD TV had the worst decline, falling 17% on quarter and 22% on year. Thanks to growth in tablet PCs, the mini-note/tablet segment was the only application showing on-year growth. However, as a result of panel price increases in second-quarter 2011, and increasing shipments, panel makers are now targeting 22% revenue growth in second-quarter 2011.

In first-quarter 2011, LG Display continued its leadership in revenue terms with 25.9%, but its share declined from 27.9% in fourth-quarter 2010. Samsung Electronics ranked second on a revenue basis with 25.6%, an increase from 25.2% in fourth-quarter 2010. AU Optronics (AUO) and Chimei Innolux (CMI) both increased their revenue shares in first-quarter 2011, from 15.1% to 16.5% and from 14.1% to 15.6%, respectively. Sharp ranked fifth, with 7.9%, down from 9.8% in fourth-quarter 2010.

Source: DisplaySearch, compiled by Digitimes, May 2011

Source: DisplaySearch, compiled by Digitimes, May 2011