For the last few months we have been making our early monthly panel price assumptions based on our experience monitoring the display space, the CE industry, and our data that goes back almost 16 years. That said, things have not been within anything that one could call ‘normal’, and panel prices have been rising with a momentum we can only understand by wiping the slate clean and starting from scratch. There are consumer and market forces that are in play currently, particularly on the demand side, that have never been faced by the display space, and reactions to such are extremely emotional and do nt seem to follow logic in many cases. To make matters worse, the same implications that have affected display demand have now worked through all CE infrastructure, causing display component feeder issues that have exacerbated the pricing situation.
That said, we had expected panel prices to continue to rise in January and they did, but in a strange way, more rationally than we had expected. We had expected monitor panel pricing to increase between 0.4% and 1.0% and notebook pricing to increase between 1.2% and 1.9%, while we expected TV pricing to increase between 4.5% and 6.5%. Without stating the obvious, we were a bit off, but not in the areas we would have expected. In particular, TV panel prices, which have been rising precipitously came in up 4.0% which is lower than our expected range, with a monthly ROC less than any month since May of last year. We have noted that the ROC for TV panel price growth had steadied for the last two months of last year between 5% and 6%, which is where we expected it to remain in January, so a 4% ROC, from our perspective, would be ‘better than expected’, even up 4%.
Where we were truly wrong was with notebook panel pricing ROC, which we had expected would follow a pattern similar to the last few months, growing less than 2% m/m. In January notebook panel pricing increased by 3.1%, larger than any m/m increase in the last 10 months. We expect this was based on demand, which continues as COVID-19 remains a force keeping many schools in a remote learning mode, and worries that component shortages will continue into 1Q ’21 or get worse. Brands seem willing to pay higher prices for safety stock, to make sure they have product to sell into the Chinese New Year, and smaller brands, who are struggling to find sourcing, have little choice but to pay even higher prices to obtain what they can to fill expected demand.
We believe the same issue was also responsible for a large jump in monitor panel prices in January, although we expect demand was a bit less of a factor than with notebooks. Monitor panel prices increased by ~5.0%, far above our estimate, even with continuing shifts in panel capacity from TV (less profitable) to IT products (more profitable), with the fear of continuing component shortages driving the increase. Typically monitor panel price ROC runs ~2% during the up part of a pricing cycle, so an increase of 5% is unusual and hints at the level of concern buyers have toward availability. While January and February are typically volatile months in the display space, as we noted, we have to start from scratch this year and try to understand if we are living a ‘new normal’ or whether things will revert to a more typical pattern relatively soon. More to come over the next few days on supply/demand issues.
That said, we had expected panel prices to continue to rise in January and they did, but in a strange way, more rationally than we had expected. We had expected monitor panel pricing to increase between 0.4% and 1.0% and notebook pricing to increase between 1.2% and 1.9%, while we expected TV pricing to increase between 4.5% and 6.5%. Without stating the obvious, we were a bit off, but not in the areas we would have expected. In particular, TV panel prices, which have been rising precipitously came in up 4.0% which is lower than our expected range, with a monthly ROC less than any month since May of last year. We have noted that the ROC for TV panel price growth had steadied for the last two months of last year between 5% and 6%, which is where we expected it to remain in January, so a 4% ROC, from our perspective, would be ‘better than expected’, even up 4%.
Where we were truly wrong was with notebook panel pricing ROC, which we had expected would follow a pattern similar to the last few months, growing less than 2% m/m. In January notebook panel pricing increased by 3.1%, larger than any m/m increase in the last 10 months. We expect this was based on demand, which continues as COVID-19 remains a force keeping many schools in a remote learning mode, and worries that component shortages will continue into 1Q ’21 or get worse. Brands seem willing to pay higher prices for safety stock, to make sure they have product to sell into the Chinese New Year, and smaller brands, who are struggling to find sourcing, have little choice but to pay even higher prices to obtain what they can to fill expected demand.
We believe the same issue was also responsible for a large jump in monitor panel prices in January, although we expect demand was a bit less of a factor than with notebooks. Monitor panel prices increased by ~5.0%, far above our estimate, even with continuing shifts in panel capacity from TV (less profitable) to IT products (more profitable), with the fear of continuing component shortages driving the increase. Typically monitor panel price ROC runs ~2% during the up part of a pricing cycle, so an increase of 5% is unusual and hints at the level of concern buyers have toward availability. While January and February are typically volatile months in the display space, as we noted, we have to start from scratch this year and try to understand if we are living a ‘new normal’ or whether things will revert to a more typical pattern relatively soon. More to come over the next few days on supply/demand issues.
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