Higher TFT-LCD mkt pressure: MCI index

TAIPEI, TAIWAN: In June, the MCI index for TFT-LCDs plunged by 968.7 points, dropping from 8306.2 (June 2, 2008) to 7337.4 (June 30, 2008), reaching a new low since the start of 2008, according to WitsView. 

Aside from the external negative factors (inflation pressures, record high oil prices and so forth), the sharp decline reflected rising concerns on the LCD sector’s inherent market fundamentals.

The market environment has indeed weakened, as panel prices once again fell in June and the pressure on the panel and set inventory rose. Despite the market entering the traditionally strong third quarter, the outlook is somewhat uncertain. This can be inferred by the MCI index falling past the 7500 level. The 7500 level is considered a benchmark, where it marked the first trough in 1Q08.

Another key signal was the widening gap between the 20-day average and 60-day average. When the former (8144.9) crossed below the latter on June 12, the difference was 16.2. As of June 30, 2008, the difference has increased to 348.3 points.

For July, it will be difficult for the MCI index to experience a strong rebound. With WitsView projecting additional panel price falls (IT panels: More than $5; TV panels: $5~$15), the market confidence will remain somewhat subdued at the moment. But looking further, the traditional strong third quarter should more or less improve the market uncertainty. Separately, a “technical rebound” may occur, thus propping up the index to some extent, as well.

MCI, which stands for Market Confidence Index, is an indicator tailored for the TFT-LCD industry. In the past, marketers tend to use the mainstream panel prices to diagnose the health of the TFT-LCD industry and predict its market trend.

However, as the application sizes vary and changes on the market focus occur all the time, it is not easy to find an appropriate tool to judge the market climate. In view of this, WitsView developed MCI, aimed to become a mutual-language among industry participants for effective communication on the general industry outlook and market trend.