Semiconductor & Display in price decrease…Joy and sorrow to be separated in the second half
[ Park Seul Gee seul@ ] | 2017-10-11 10:39:46
[Digital Times, Park Seul-gee] Nowadays memory semiconductor and display prices are showing a downward trend. But, earnings are expected to improve in the second half on the back of price rises.
Meanwhile, display companies are expected to see their earnings deteriorate from the previous quarter due to continued panel price declines.
Memory semiconductors, such as DRAM and NAND flash, are expected to rebound as demand for PCs, mobile phones, and servers increases, but display prices are expected to fall due to sluggish demand and oversupply.
According to market researchers DRAM Exchange and Witzview, the average fixed price of DDR4 4Gb 512Mx8 2133MHz for PCs remained at the same level as last month, The price of NAND flash 128Gb 16Gx8 MLC is USD 5.60, down 3.11% from the previous month. NAND flash prices have fallen only 17 months since April last year.
LCD panel prices for TVs also dropped by an average of 2% from the previous month until April 15. Especially, prices for 65-inch and 55-inch UHD TV panels fell 2.0% and 1.6%, respectively, from the previous month. LCD panel prices for monitors and notebooks also fell by 0.5%.
Despite NAND flash and LCD panel prices are on a downward trend, the semiconductor and display industry`s earnings are expected to be mixed in the second half. The NAND flash market is expected to rebound at the end of this month, as semiconductor makers are shifting from 2D (3D) to 3D (3D). However, the decline in large-size LCD panel prices, which began to decline in July, is unlikely to stop.
Securities analysts expect SEC`s semiconductor division to post operating profit of KRW 10 trillion in the third quarter. In the same period, SK Hynix`s operating profit was estimated at KRW 3.83 trillion, up by 427% from the same period last year and 25.4% from the previous quarter. Both companies are expected to continue to record record-high earnings in the second half of the year.
But the display industry looks grim. LG Display`s the third quarter operating profit to increase by 106.5% from the same period of last year, but it is expected to drop 17% to KRW 667.5 billion compared to the previous quarter. It is estimated that Samsung Display will also have an operating profit of KRW 1.2 trillion, down 28.7% from the previous quarter.
This is also the reason why Samsung and LG are concentrating their efforts on OLED due to deteriorating profitability caused by falling LCD prices. China BOE and China Star are planning to mass produce 10.5G LCD with monthly capacity of 120,000 units from 2018 and the second quarter, 2019 respectively, so the price drops due to oversupply of large LCD panels is expected to continue for a while.
An industry expert said, "DRAM prices, which account for more than 60% of Samsung Electronics and SK Hynix`s sales, remain strong, and the decline in NAND flash prices will have a temporary impact on the second half earnings. It is expected to continue to decline, but the decline will gradually decrease."
By Park Seul Gee seul@
[ copyright ⓒ The Digitaltimes ]
Meanwhile, display companies are expected to see their earnings deteriorate from the previous quarter due to continued panel price declines.
Memory semiconductors, such as DRAM and NAND flash, are expected to rebound as demand for PCs, mobile phones, and servers increases, but display prices are expected to fall due to sluggish demand and oversupply.
According to market researchers DRAM Exchange and Witzview, the average fixed price of DDR4 4Gb 512Mx8 2133MHz for PCs remained at the same level as last month, The price of NAND flash 128Gb 16Gx8 MLC is USD 5.60, down 3.11% from the previous month. NAND flash prices have fallen only 17 months since April last year.
LCD panel prices for TVs also dropped by an average of 2% from the previous month until April 15. Especially, prices for 65-inch and 55-inch UHD TV panels fell 2.0% and 1.6%, respectively, from the previous month. LCD panel prices for monitors and notebooks also fell by 0.5%.
Despite NAND flash and LCD panel prices are on a downward trend, the semiconductor and display industry`s earnings are expected to be mixed in the second half. The NAND flash market is expected to rebound at the end of this month, as semiconductor makers are shifting from 2D (3D) to 3D (3D). However, the decline in large-size LCD panel prices, which began to decline in July, is unlikely to stop.
Securities analysts expect SEC`s semiconductor division to post operating profit of KRW 10 trillion in the third quarter. In the same period, SK Hynix`s operating profit was estimated at KRW 3.83 trillion, up by 427% from the same period last year and 25.4% from the previous quarter. Both companies are expected to continue to record record-high earnings in the second half of the year.
But the display industry looks grim. LG Display`s the third quarter operating profit to increase by 106.5% from the same period of last year, but it is expected to drop 17% to KRW 667.5 billion compared to the previous quarter. It is estimated that Samsung Display will also have an operating profit of KRW 1.2 trillion, down 28.7% from the previous quarter.
This is also the reason why Samsung and LG are concentrating their efforts on OLED due to deteriorating profitability caused by falling LCD prices. China BOE and China Star are planning to mass produce 10.5G LCD with monthly capacity of 120,000 units from 2018 and the second quarter, 2019 respectively, so the price drops due to oversupply of large LCD panels is expected to continue for a while.
An industry expert said, "DRAM prices, which account for more than 60% of Samsung Electronics and SK Hynix`s sales, remain strong, and the decline in NAND flash prices will have a temporary impact on the second half earnings. It is expected to continue to decline, but the decline will gradually decrease."
By Park Seul Gee seul@