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Throttle Back Production

July 5, 2011 | Author: Ibex Marketing

DigiTimes has reported that LCD panel makers in Korea and Taiwan scaled back production of large size panels, starting in June. Panel prices went up a little in May, but soft demand for product has threatened to drive prices down again. By limiting production, the manufacturers hope to stabilize prices. The article indicated that the cuts will last through July, and likely will extend into August.

This is not good news for the manufacturers. These plants are capital-intensive, and it costs more when they are operating at anything less than full capacity. On the other hand, they lose money if they have to sell the products below their cost, so they have to walk a fine line to try to minimize the inevitable losses. This could be a good sign for consumer, however. If there is a glut of panels on the market now, then the prices for HDTVs during the holiday buying season will remain low. The only problem would be if the economy should turn on a dime and lots of people go looking for a new television in November; if demand exceeds supply then the prices will rise, but that seems unlikely at this point.