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THE 6.4 magnitude earthquake that struck Tainan, Taiwan, on 6 February 2016 has disrupted the capacities of the LCD manufacturing facilities in the area.
The quake hit during the off-peak season for the LCD panel market, and damaged Innolux’s Gen-5 and Gen-6 fabrication facilities. Other production facilities in the quake-affected areas have reduced capacities by around 5 to 10 percent for the month due to the damage.
This will translate into supply disruption that will cause sharp price fluctuations in the panel market in the short term. However, the prices will return to normal in March, as panel fabs in Taiwan resume normal operations after repairs.
Among the large-size applications, TV panels were affected by the earthquake the most. Innolux is the world’s sole supplier of 39.5-inch TV panels, which are made in its two Gen-6 fabs.
With the earthquake damaging one of these two Gen-6 fabs, Innolux’s clients switched to larger panels such as the 40- and the 43-inch to avoid supply shortage. This shift in TV panel orders has in turn strengthened and stabilized the prices of mid-size products in the 39.5- to the 43-inch range.
Innolux is also the leading supplier of the 50-inch TV panels, and the earthquake did cause slight damage to its Gen-7.5 fab that produces this product. Nonetheless, the average price of the 50-inch has fallen this month as well.
The earthquake did not disrupt the supply of TV panels sized 32, 49, 55 and 65 inches, so the weak overall demand and lackluster sales of TV sets during the Chinese holidays are still the overriding factors in their pricing during February.
The earthquake did not directly affect the monitor panel production, but Taiwanese suppliers suffered losses in their monitor panel inventories and have shifted some of their capacities originally for monitor panels to make TV panels.
Innolux’s Gen-5 fab, which devotes half of its capacity to notebook panels, took some serious damage, but slumping notebook demand combined with high inventory levels means prices are unlikely to rise.