The cost of a new flat panel LCD TV or PC monitor could rise by as much as 20% due to a global shortage of glass that is used to manufacture the screen claims senior executives at two of the world’s LCD TV makers.
Another problem facing Australian suppliers is that demand out of China is driving production with this market set to be given priority on production lines over Australian orders say analysts.
While Prime Minister Kevin Rudd was handing out millions in Australia to stimulate the economy, China was handing out billions in incentives for consumers to buy consumer electronic products.
During the past 3 months Chinese television makers have agreed to buy US$4.4 billion worth of flat panels alone from Taiwan producers, Taiwan External Trade Development Council Chairman Wang Chih-kang said this week after meeting with various manufacturers in China last week.
The glass shortage is set to affect brands like Sony, Panasonic , Sharp, Viewsonic and manufacturers who are using third party Companies in Taiwan to make TV’s and monitors that range in sizes between 30″ and 40″ say analysts.
Less affected will be Korean brands like Samsung and LG who were more conservative on their outlook say analysts.
During the past 6 months according to research group DisplaySearch, the price of liquid crystal displays used in televisions, computer monitors and notebooks has been steadily rising due to shortages which are now being described as “critical”.
Executives at AU Optronics Taiwan’s biggest LCD maker who makes TV’s for Sony, BenQ, LG and several other leading brands and Chi Mei Optoelectronics are saying that in the last quarter of 2010 the cost of a device with a flat panel display will cost more.
“The shortage of glass is severe,” L.J. Chen, president and chief executive of AU Optronics said.
According to the Wall Street Journal Corning, the world’s largest glass producer, said last month demand for glass used to make flat screens is stronger than expected and supply is still falling short of demand.
Analysts say AU Optronics and Chi Mei are facing a more severe shortage for glass compared to their Korean peers, Samsung Electronics and LG Display because they had placed smaller orders due to their more conservative demand outlook.
Hanna Chang, an analyst at Taiwan International Securities expects AU Optronics and Chi Mei’s panel prices to rise by 10% to 20% by the end of the year.
AU Optronics’ Chen said it will take three to six months for glass producers to restore their supplies back to normal levels.
AU Optronics’ Chen said the company is discussing with its glass suppliers how to overcome this component shortage. Chen said the company is short of around 20%-30% of glass supply. Shortages are mainly seen in glass used to make computer monitors and television screens measuring 30-inches to 40-inches.