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Follow UsUSA: Consumers are snapping up digital photo frames and tiny TVs, spurring a period of supply tightness and price increases for small/medium displays that is expected to linger through the first quarter, according to iSuppli Corp.
Overall demand for small/medium displays, i.e. screens with diagonal dimensions of less than 10 inches, exceeded supply by a scant 0.8 percent in the fourth quarter, down from 6.2 percent in the third quarter. Supply will exceed demand by only 1 percent in the first quarter.
“With demand just barely higher than supply, availability of some screens has been constrained, which in the fourth quarter led to something that hasn’t been seen in the small/medium display market for a year: price increases for some products,” said Vinita Jakhanwal, principal analyst, mobile displays, for iSuppli.
“With the large volumes and intense competition in small/medium displays, prices typically decline on a quarterly basis. The price increases indicate that demand growth is extremely vigorous.” The global Average Selling Price (ASP) of small/medium displays used for digital photo frames rose to $30 in the fourth quarter, up 20 percent from $25 in the third quarter, Jakhanwal noted. The ASP for small/medium displays for tiny LCD televisions rose to $8.40 in the fourth quarter, up 2.4 percent from $8.20 in the third quarter.
Although prices for digital photo frame displays will decline by 3.3 percent in the first quarter, prices will increase slightly in other areas, including PMPs, mobile handsets, automotive applications, camcorders, cameras and industrial/financial applications, iSuppli predicts. This will cause the overall ASP of small/medium displays to rise to $6.80 in the first quarter, up 22 percent from $5.60 in fourth quarter.
In general, prices for smaller-sized small/medium displays are remaining steady or decreasing slightly, while larger displays are experiencing price increases.
2008 outlook
Pricing strength will contribute to a strong first quarter for small/medium displays, with global revenue reaching $6.4 billion in the first quarter of 2008, up 17.3 percent from $5.4 billion in the first quarter of 2007. Revenue in the first quarter will decline by 6.5 percent compared to the fourth quarter, but such a seasonal slowdown is typical in the small/medium market. For all of 2008, small/medium display revenue is expected to rise to $27.6 billion, up 14.7 percent from $24 billion in 2007. This represents a significant acceleration compared to 8.8 percent growth in 2006.
As per iSuppli’s quarterly forecast of global small/medium display revenue, on a percentage basis, digital photo frames will be the world's fastest-growing application for small/medium display in 2008, with global revenue rising to $699 million, up 91.4 percent from $395 million in 2007. However, mobile handsets will continue to dominate, accounting for $15.9 billion in revenue in 2008, up 17.3 percent from $13.5 billion in 2007.
Flies in the ointment?
Although strong demand for small/medium panels is expected in 2008, there remains some risk of imbalances in the supply/demand equation. Chinese white-box mobile handset demand is seen as weakening. Furthermore, major panel overbooking could result in inflated 2008 demand expectations, leading to a correction in demand later this year.
The background to this is the precarious US economy and stock market. The sub-prime crisis has weakened the US economy and could dampen IT and consumer spending. Small/medium LCD panel makers have become concerned about this and are contemplating reducing or slowing their capacity expansion efforts to control output during the second half of 2008.