Did Large-Area TFT LCD Revenues Hit Bottom in February?

The large area TFT LCD industry is going through the darkest period in several years, as measured by monthly revenues. Data from the most recent Monthly TFT LCD Shipment Database indicates that February large area (9 inches and larger) TFT LCD revenues fell below $5B for the first time in over three years, declining 3% M/M and 13% Y/Y.

Source: Monthly TFT LCD Shipment Database
There are several factors impacting the large area TFT LCD industry at this time. First, there is a seasonal element constraining monthly shipments. February is the time many manufacturing sites in China close for Chinese New Year, and the time off reduced production and shipments. More concerning is the decline in monitor and notebook PC panel demand, which have been ongoing. At the same time, tablet PC panel shipment and pricing are under pressure due to a slowdown in demand in early 2014. Also, with the market balance shifting to tightness, some panel makers are clearing out inventories, but through discounting, which has a negative impact on revenues.
This leads to a broader issue of panel price decline. Large area TFT LCD panel prices have been falling since 2013. As shown in the figure, panel prices have fallen continuously for the past 12 months and in double digits Y/Y every month since September. This has a direct, negative impact on panel revenues. However, in January and February there was a halt in the rate of decline.

Source: Monthly TFT LCD Shipment Database
Given all this, will things keep getting worse, or was February the bottom of this supply-demand cycle? We are expecting recovery to begin over the next few months. As we recently commented, some LCD TV panels are in shortage. We expect several positive trends over the next several months.