Samsung Electronics has announced that it will reduce the utilization rate of the factory to lower the output of LCD panels. This is due to weak demand and to help the global supply glut.
This is a reversal from years past in which dropping price to prop up demand has been the action taken to resolve oversupply issues. This is a much healthier approach overall and one the industry has needed for some time.
Weakest markets right now are Europe and the U.S. If other panel providers follow (actually quite a few have greatly reduce factory utilization already without any announcements) it could help provide an industry recovery. (Sony could use this after 7 years of negative profit on their TV business).
Both South Korean panel makers, LG & Samsung, saw profit drop nearly in half from 2nd quarter to 3rd quarter this year, largely because of weak panel prices.
Interesting is that both LG and Samsung have won approval to build brand new panel factories in China. Which would add to the total glut, not take away. There has been some talk that they are flexible about the timing of when the factories will be complete and ramp up production from them. AUO is also moving to build a factory in China as well, adding to the possible oversupply vs. real demand for LCD panels.
JZ
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