LCD panel industry gains earnings momentum from surge in price and demand

[Photo provided by LG Display Co.]

Chips are not the only electronic component in short from surge in IT and automaking activity across the globe as LCD panel prices have been shooting up because supply cannot keep up with demand, an upside for Korean panel makers in their earnings outlook.

According to market research data provider WitsView on Wednesday, LCD TV panel prices rose 6.2 percent on average from earlier this month and 8.3 percent from last month.

By size, 32-inch TV panel prices jumped 7.8 percent, 50-inch panels 5.1 percent, and 65-inch panels 4.9 percent.

Prices of laptop and computer monitor panels also increased 4.1 percent and 4.0 percent, respectively, compared to earlier April.

Surging TV demand from North America and Europe lifted the price of 55-inch LCD TV panels to $215, the highest since December 2015. The price of 32-inch LCD TV panels also soared to the highest $83 since June 2015.

The recent LCD panel price hikes stem from supply shortage to meet sudden spike in demand from faster-than-expected turnaround in global economy.

“Demand is still strong but inventory level remains low. Panel prices will likely head upward till the second half of the year,” said Kim Sun-woo, an analyst at Meritz Securities.

Kim Dong-won, an analyst at KB Securities also believed the shortage of key parts for panel assembly won’t likely be eased by the end of this year.

“TV makers like Samsung Electronics, LG Electronics and TCL with PC makers Dell, HP and Lenovo have purchased less than half of needed LCD panels as of the second quarter. Earnings of display related companies such as LG Display, SK Materials, Silicon Works and Hansol Chemical will grow bigger,” Kim added.

LG Display still manufactures LCD panels, and Silicon Works supplies display driver ICs for LCD panels to LG Display. SK Materials and Hansol Chemical supply chemical materials to manufacture LCD displays.

LG Display shares closed 6.02 percent higher at 26,400 won in Seoul trading on Thursday, Silicon Works 2.52 percent up at 101,600 won.

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