Trade Resources Industry Views Panel Shortages Expected to Hurt Notebook Demand

Panel Shortages Expected to Hurt Notebook Demand

LCD TV panel shortages are prompting panel makers to shift their capacity and the issue has caused notebook panels to see tight supply, according to Compal Electronics president Ray Chen, while notebook panel demand will remain strong in the first half of 2017. Vendors are likely to raise their notebook prices to shift some of the panels' rising costs on to consumers, which will impact notebook demand.

Demand for notebooks has been rising since early second-half 2016 and Taiwan-based ODMs have also seen clients aggressively pulling in their orders, but ODMs are having difficulties fulfilling some of the orders due to shortages of key components such as memory and panels. With these orders being delayed, Chen expects notebook ODMs' shipments in the first quarter to remain strong.

Since LCD TV panels are more profitable than notebook ones, rolling out LCD TV applications is the priority for panel makers currently.

Chen said he is aware of the market rumor that Apple is looking to shift its MacBook orders from Quanta Computer to Foxconn, but maintained that whether such a shift will occur or not will have no impact on Compal since it does not have any MacBook orders. As for whether Foxconn will return to the notebook ODM industry to compete for orders, Chen pointed out that R&D resources are necessary for handling Windows-based notebook ODM orders, but so far he has not seen Foxconn establishing an R&D team for the notebook.

As for non-notebook businesses, Chen said that Compal has recently invested in industrial PC (IPC) maker Avalue Technology. But for cases that Avalue cannot handle, it will be passed to Compal and the coordination between them is helping both Compal and Avalue grow in the IPC market.

Commenting on the US president-elect Donald Trump's policy of demanding US-based IT companies move their production lines back to the US, Chen noted that the policy will not impact Compal much since notebooks are already a mature product and the chance of its clients asking it to move production lines to the US is very low.

Chen also believes that Trump is likely to change part of his agenda after seeing the restrictions in reality. Chen noted that even if the clients decided to move their production lines back to the US, it would probably happen with the US government promising some financial assistance.

Since tablets are no longer a major product line that its US-based client focuses on, Chen believes the client is unlikely to move related production back to the US due to high costs. Chen did not reveal the client's name, but Compal is believed to be a manufacturer of Apple's iPad.

As for Compal's plants outside China and Taiwan, its plants in Mexico have not been handling any major production. The company's plants in Vietnam maintain a small volume of production.

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Panel Shortages Expected to Hurt Notebook Demand in 1H17, Says Compal President