Austin (TX) - A decline in large-area LCD shipments along with growth in production capacities resulted in a substantial drop of LCD monitor module prices in the third quarter of this year, market research firm DisplaySearch reports. Surplus and price pressure is expected to continue for the industry until Q3 of next year.

After seven quarters of record shipments, LCD manufacturers had to deal with a two percent drop of shipments of TFT LCD with a size of at least 10 inches. Compared to the preceding three months LCD monitor module shipments declined by ten percent, while notebook LCDs grew nine percent, LCD TVs added four percent and other applications gained 22 percent, DisplaySearch said.

Slowing sales increases caused growing inventories, jumping from three percent or three million panels and LCD monitors in Q2 to 15 percent in Q3. As a result, manufacturers were faced with significant pricing pressure, driving down LCD monitor module prices by 21 percent. Displaysearch expects this trend to continue with prices dropping another 19 percent in Q4.

The research firm believes that surplus will narrow to about ten percent in Q4 but widen again in Q1 2005 due to seasonal weakness. Average selling prices of LCDs are seen to ease another five percent in the first three months of next year. By Q3 of next year, Displaysearch expects the surplus to be reduced to a range between two and four percent, creating a tighter supply environment.