The oversupply ratio of LCD monitor panels is expected to widen in the first quarter of 2006, as the period is a traditional slow season for the segment and panel supply will continue increasing, according to Chunghwa Picture Tubes (CPT).

LCD monitor panel suppliers will start to face stronger price-cutting pressure this month due to seasonal effects, the company said.

The ratio of oversupply in the first quarter of next year will vary according to the condition of LCD TV demand, CPT said. If LCD TV demand remains strong, the newly ramped capacity at panel makers will be consumed and the oversupply ratio of LCD monitor panels will not be as significant as forecasted, the maker indicated.

Dell has been adjusting its LCD monitor inventory since late last month, with the adjustment ratio reaching 20-30%, as its previous forecast of demand this quarter was overly optimistic, CPT indicated.

Nevertheless, the range is still within acceptable limit and other customers of CPT do not have inventory as high as Dell’s (one to two weeks higher than the same period before), the panel maker said.

Most major Taiwan-based panel makers are optimistic about TV panel demand next year and have forecast that the market will rise to 42-44 million units, according to the companies. AU Optronics (AUO) expects the market to nearly double to 44 million units next year, up from 23 million this year while LCD TV demand will jump from 20 million units this year to 35 million next year.

Chi Mei Optoelectronics (CMO) also expects the LCD TV panel market to grow more than 80% to 42 million next year. The company thinks it unlikely that a serious oversupply of large-size panels will occur in the first half of next year, as the supply of certain key components may run tight.

Chunghwa Picture Tubes (CPT) estimates LCD TV panel demand will reach 44 million units and LCD TV demand will reach 36 million next year.

Market research firm WitsView Technology indicted that if each industry player reached its own TV panel shipment goal next year, the market would total more than 50 million panels. However, WitsView expects the global LCD TV panel market to reach 41 million units in 2006.