Handset panel inventory level increases in China

Demand for handset panels in China started dropping in the second half of the second quarter of 2010 causing inventory levels to rise, according to market sources, as the China government began cracking down on white-box handset market.

Weak demand for entry-level handset panels is expected to persist until the National Day holiday in October kicks off the peak season, the sources said.

LCD panel maker AU Optronics (AUO) noted that demand for entry-level handset panels has been dampened by the China government's crackdown on white-box handsets. As a result, AUO has shifted more of its capacity to meet demand from first-tier vendors or for high-end handset panels, the company noted.

Meanwhile, demand for glass-based capacitive touch panel for high-end handsets from China's vendors remains strong, and shipments and orders are increasing significantly, with supply becoming tight, Taiwan-based touch-panel controller IC design and solution supplier Egalax_Empia Technology (EETI) said.

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