GPUs, LCD Panels Show PC Stockpiling -- Price Cuts Coming?

(MoneyWatch)  Last week brought the news of the AMD earnings report and the observation that vendors may be overstocking PC inventory to the point that the chip company would see less business than usual in the fourth quarter. Now we have some confirming information from the graphical processor and LCD panel fronts, meaning a greater chance that PC vendors will have too many computers in their warehouses and may cut prices to try to move inventory out the door.

According to Jon Peddie Research, Q3 graphics processor shipments jumped by 21.2 percent over second quarter.

"A total of 119.45 million units were shipped in the third quarter, exceeding the record 111 million units that shipped in Q3, 2008," said Dr. Jon Peddie, president of Jon Peddie Research in Tiburon, California. "So the market has caught up with, and exceeded, last year's highs. The crash of fall 2008 is now behind us."

That would make sense given the heightened levels of activity that AMD had seen. The big gain was in notebooks. Interestingly, although integrated graphics processors, the type used in inexpensive netbooks, jumped by 27 percent, discrete graphics processors were up by more than 36 percent. Peddie takes that to mean that netbooks won't have the market share they did last year and that vendors expect consumers to "buy up." He also noted a potential Q4 PC inventory glut:

"The channel is full and the products in it will have to be sold off before the OEMs and their resellers take a chance of seeing the channel becoming overstuffed. That suggests that while Q4 is typically a good quarter for PCs, the quarter-to-quarter growth in Q4 may not be as robust as Q3. Graphics are a great leading indicator," Peddie said, "The graphics go in before the PC is built or shipped.

From DisplaySearch, we have word on September shipments of TFT LCD panels:

September 2009 shipments of large-area TFT LCD panels reached 52 million units, up 2% M/M and 25% Y/Y, according to the most recent DisplaySearch Monthly TFT LCD Shipment Database--setting a new record for monthly large-area TFT LCD shipments. Large-area TFT LCD revenues reached $6.8 billion, up 6% M/M and 15% Y/Y.

Although the general market grow, monitor panel shipments were down by 8 percent, which is the first decline since February 2009. In short, it's more evidence that PC vendors may have overbuilt and that they will have excess inventory kicking around, which will likely turn into some degree of price wars and they all try to clear their warehouses.

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