PDP Module Shipments Rise 118% in Q3'05

Traditional seasonal strength, along with plasma TV street pricing below sweet spot levels, has boosted plasma panel shipments to 1.9M units in Q3'05, up 37% Q/Q and 118% Y/Y as reported in DisplaySearch's latest issue of its Quarterly PDP Module and TV Shipment and Forecast Report. The strong demand and the recent termination of production at four older fab lines have caused a 20%+ 1H'05 PDP surplus to become a 2H'05 shortage. In addition, with 2006 PDP supply growing at less than half the rate of 2005 supply, 2H'06 PDP supply should be a significant concern to the PDP TV industry with double-digit shortages possible in Q4'06. Slower supply growth will cause shortages to persist and prices to fall more slowly, which will open the door for the LCD TV industry to narrow the price gap and increase their market share, because supply should not be a concern to the LCD TV industry next year. With 2007 PDP supply growth expected to outpace 2006, PDP manufacturers will likely consider accelerating their capacity investments in order not to choke off demand.



Q3'05 was a record quarter for the PDP module suppliers as volume weighted average PDP TV prices reached record lows of less than $1800 for 42" ED, less than $2700 for 42-43" HD and less than $3800 for 50". The increasingly attractive street prices along with strong seasonal demand boosted utilization to 98%. Full utilization is expected in Q4'05 resulting in shipments of 2.3M units. As a result, 2005 PDP shipments are expected to reach 6.8M units, up 91%.



Given the large increase in shipments along with slower declines in ASPs, PDP module revenues also established a record high. Revenues were up 57% Y/Y and 29% Q/Q to $1.6B, and they are expected to rise at least 48% Y/Y and 16% Q/Q to $1.8B, producing annual revenues of at least $5.7B, up 35%. ASPs were down 6% Q/Q and 28% Y/Y in Q3'05 to $826 and are expected to fall more slowly in Q4'05, down no more than 3% Q/Q and 22% Y/Y to $805. Given tight supply, high utilization, healthy pricing outlook and continued cost reduction efforts, the profitability outlook for PDP module suppliers has never been brighter.