By Lorna Brett

Asian LCD manufacturers appear to bracing for a downturn with many getting set to cut outputs over the next month for the first time since the GFC in the face of recent market uncertainties, according to the Korea Times.

The newspaper reports that manufacturers are cutting their panel output in response to lower-than-expected demand for TV's in China, as well as to the economic unrest in the south of Europe. Demand for LCD's is traditionally significantly impacted by happenings in financial markets.

"The plans to cut output don't mean that LCD makers are foreseeing another downturn. I believe the overall market conditions remain quite healthy," LG Display CEO Kwon Young-soo told the news source, downplaying the rumoured looming slowdown.

The company confirmed plans to cut panel output during August, mirroring moves by companies like Chinmei Innolux and AU Optronics - both of which have already lowered production levels. According to the Korea Times, Samsung Electronics is also reportedly considering maintaining a 97% factory utilisation rate at a number of its plants over the coming months.

This is the first adjustment made by LCD manufacturers since many last decreased production levels in 2008 in the face of a global recession.

Manufacturers look to the second half

"The global LCD industry will enter a strong season soon. Meanwhile, the demand for three dimensional televisions looks solid, while Internet-based interactive TVs will fuel further good momentum for the industry," Kwon said.

Kwon believes that profit margins won't be seriously impacted by the cuts, and that the voluntary output cuts should keep panel prices "healthy."

He also pointed to the fact that less orders have been placed thanks to a greater amount of inventory already on hand, as a result of poorer than expected sales of flat-panel TV's in the second quarter.

According to LG's CFO Jeong Ho-young, LG's internal LCD inventories are only three or four days higher than usual.
According to market research firm DisplaySearch, TV demand in China was down to 7 million units in the second quarter from 9 million units in the previous quarter.