LONDON Shipments of displays for mobile handsets will decline to 1.5 billion units in 2009, down 6.2 percent from 1.6 billion units in 2008, according to market research group iSuppli.
Shipments will rise by a marginal 0.3 percent in 2010. The market will not recover to exceed the 2008 level until 2011, when shipments will reach 1.65 billion units, say the researchers.
"The handset display market already was struggling in 2008 due to declining Average Selling Prices and dwindling margins," said Vinita Jakhanwal, principal analyst for mobile displays at iSuppli. "However, the downturn now is beginning to impact unit shipments, leading to revenue declines for the industry this year and next."
The main reason given for the downturn is the decreasing replacement rate for handsets due to deteriorating economic conditions.
"New handset demand from the emerging countries will not be sufficient to offset this decline," said Jakhanwal.
Beyond the slowdown, a major buildup in inventories of finished handsets will make the decline more severe in the beginning. Indications of an inventory correction are said to have already had a major impact on the industry in the fourth quarter.
In response to this, handset display shipments from the top suppliers declined by more than 40 percent in the fourth quarter compared to the third, according to iSuppli.
On the pricing front, iSuppli suggests the expansion of TFT-LCD capacity has had a significant impact as new investment has enabled newer-generation fabs to meet the expanding demand for monitors, notebooks and LCD TVs.
Despite the economic slowdown, mobile-display panel pricing for all screen sizes and technologies is expected to maintain its historical annual decline rate of 15 percent to 20 percent in 2009.
iSuppli believes that the ASP decline in 2009 will not be as severe as it was in 2008 for some specific panel types, since most suppliers have reduced capacity and their fab utilization rates in response to the slowing demand.
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