Sharp Corp chief executive officer Katsuhiko Machida said prices of liquid-crystal-display (LCD) panels may stabilize in March as manufacturers stop spending in response to the global financial crisis, depleting inventories.
“The price will hit the bottom when inventories are gone, and we estimate that will happen by the end of this March,” said Machida, whose company is Japan’s largest maker of LCD televisions.
Makers of LCD panels are struggling with falling prices amid the global recession. Sharp said last month it would close LCD panel production lines at two plants in western Japan to maintain profitability.
“At their worst last year, LCD panel inventories rose to 14 million,” Machida told reporters on Tuesday in Osaka, where the company is based. “Since most LCD makers started postponing new investments last fall, supplies are decreasing rapidly.”
Demand for LCD televisions remains strong and sales are up about 20 percent compared with a year earlier, he said.
The effects of the strengthening of the yen, which rose 23 percent against the US dollar last year, may be offset by a drop in prices for steel, copper, aluminum and other materials used to make panels, Machida said.
“That drop has been even more drastic,” he said. “We can take advantage of that to improve earnings next business year.”
Sharp, which makes Aquos-brand televisions, in October cut its net income forecast 43 percent to ¥60 billion (US$669 million) for the year ending March 31.
Panasonic Corp, also based in Osaka and the world’s biggest consumer electronics maker, has since slashed its full-year profit forecast 90 percent to ¥30 billion.
Meanwhile, AU Optronics Corp (友達光電), Chi Mei Optoelectronics Corp (奇美電子) and LG Display Corp had their ratings increased at HSBC Holdings Inc.
LG Display, the world’s second-largest maker of liquid-crystal displays, and AUO, Taiwan’s largest LCD maker, were raised to “overweight” from “neutral,” analyst Frank Su (蘇榖祥) wrote in a report yesterday. Chi Mei was increased to “neutral” from “underweight.”
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