Market Trend

The market uncertainty surrounding the TFT LCD industry took a further hit as the MCI index fell past the 8000 level. Between June 2, 2008 to June 13, 2008, the MCI index plunged 512.8 points, falling from 8306.2 to 7793.4. The general concern remained focused on the weak panel demand, especially in the TV segment, and the fact that panel prices have once again trended downwards in June by 2%~4%.

As mentioned in previous MCI reports, a close eye is being kept on how the TV end market sales fare in the next few months. Although Q2 is inherently a traditional slow season, with Q3 soon arriving, the outlook is being weighed by the possible impact from the fall-out of the still lingering credit crisis, inflation pressures, rising oil and food prices and so forth. If TV end product sales do not improve in the months ahead, panel makers may be prompted to allocate more capacity to IT panel production. As there are also concerns regarding the status of the IT panel inventory, if supply begins to outstrip demand, the traditional strong third quarter could falter.

Nevertheless, news reports regarding CPT and AUO’s investment on next generation lines should provide some solace. CPT is supposedly considering obtaining a NT$40 billion syndicated loan in building a new generation line or lines, while AUO is reportedly finding potential locations for the future construction of a G10 or G11. Thus, from an industry growth perspective, the investment pace appears to be still going strong.