Market Trend

Between June 22th, and July 4th, the MCI index rose to 5647.5, up by 157.4 points. During this period, the index has been hovering, and then recovered to its 20-day and 60-day average; the overall trend is still undergoing correction. Recently, spurred by inventory replenishment of downstream client, launch of new models, China’s demand boom, and component shortage, panel prices have been better than expected, up by 5%~18%. According to WitsView’s survey, even though shipments have reached the same level as last year, revenue fell behind. This is mainly attributed to the global economic woes at the end of 2008, resulting in panel price falling through the average level, similarly for the end-market. After pricing and shipment gradually recovers in 3Q09, Taiwanese makers may gradually witness a financial turnaround, but the panel price increase may lead to subsequent pressure to vendors.

According to Witsview, Corning and AGC Display has been aggressively optimizing its utilization rate, in hopes of easing the impact of glass substrate shortage. The panel undersupply has gradually softened, and the positive outlook of a financial turnaround in the third quarter, panel prices are expected to lift in order to offset the loss incurred. In 1HJuly, panel prices rose by another 4%~15%, which may create a positive influence to the short-term performance of MCI index.