In its recent Quarterly TFT LCD Supply/Demand and Capital Spending Report, DisplaySearch reported that average industry TFT LCD array fab glass input utilization dropped from a high point of 94.7 percent in Q3’05 to 86.0 percent in Q2’06. This is the lowest it has been since Q2’03, according to the firm.
So what does that mean, you ask? “Fab utilization data was recently added to this report because it is a valuable metric in evaluating the health of the LCD industry,” says DisplaySearch’s Vice President Charles Annis. “With large-area TFT demand stronger than expected and very tight supply, panel makers input glass substrates to near maximum capacity in 2H’05. Moving into 2006, several factors forced panel makers to reduce glass input in an effort to firm up supply: seasonal weakness, disappointing World Cup demand, continuous capacity expansion, weak pricing and growing inventories. Utilization is forecast to recover slightly in Q3 and will likely rise further in Q4 in line with demand growth.”
Additionally, a new model DisplaySearch applied to the small/medium supply/demand forecast reveals that first tier manufacturers, with strong design and sales resources, will be supply constrained this year. Second tier manufacturers will help fill remaining demand so that 2006 surplus levels will range 5-10 percent.