In the face of recent shortages of semiconductors and LCD panels, foreign companies including Lenovo, China's largest personal computer maker - paid visits to Hynix Semiconductor, LG Display and Samsung Electronics to shop for much-needed parts.
As the global economy had shown a faster-than-expected recovery last year, companies began to feel the pinch of short supply of semiconductors and LCD panels. Although companies strive to procure core parts, both semiconductor and LCD panel makers are not able to cater to the needs of these companies.
It has been found out that Samsung Electronics and Hynix have only a week's worth of memory semiconductors in stock. Generally, the average stock days of memory semiconductors are about three weeks. An unidentified official from a semiconductor supplier said, "Such short supply has pushed buyers into making personal visits to semiconductor suppliers like us to make sure that they are at the top of the waiting lists. The current situation is completely opposite to that of last year."
When it comes to analog semiconductors, things have got even worse. The period between order placement and delivery were approximately four weeks, but some companies extended the period up to 24 weeks. Last year, for fear of a possible economic recession companies carried out restructuring by closing down some of their production lines. However, as the global economy has bounced back at a faster than expected, supply has been greatly outrun by demand.
A branch manager for a multinational company said, "On the whole, the average delivery time has been prolonged to a great degree. I think supply will not catch up with booming demand for the time being.
South Korean foundry purveyors such as Dongbu HiTek Co. Ltd. and MagnaChip Semiconductor have their production lines running on all cylinders. iSuppli Corporation , a market research and consulting firm, predicts that global sales of semiconductors will shoot up 48.5 percent to US$ 66.5 billion on a quarter-on-quarter basis starting in the first quarter of this year, and grow by 21.5 percent on a year-on-year basis.
The price of LCD panels has been on the rise as demand, mainly driven by China, continues to stay on an upward trajectory. Last month, the prices of panels for laptop computers and monitors gained one dollar in every product category. As LCD panel makers have been insufficiently supplied with core parts such as glass substrates, polarizing plates, and LEDs they have failed to meet the demand from TV set makers. On the other hand, compared to last year, this year has seen a big upturn in demand for TV sets from China and America. As a result, major TV set makers have seen their stock levels running low. In particular, last month's LCD TV sales in China, including those over the Chinese New Year holidays, stood at four million, up 50 perceny from last year. China's demand for TVs in January and February was 8 million. It has been estimated that demand for LCD TVs has been conspicuously recovering in North American markets since the end of January, 2009.
DisplaySearch Korea, a market research and consulting firm, anticipates that the first quarter of this year will be a continued rally in the price of LCD panels along with strong demand for LCD panels. Hyun-Seung Ahn, President of DisplaySearch Korea said, “Strong demand from Chinese and North American LCD markets would be sustained, and panel makers would enjoy this boom throughout the first half of this year. However, short supply of some parts is likely to linger. He added, "After the third quarter of this year, there could be a possibility of demand-side adjustments. However, they have yet to be worrisome.”
