Panel demand in the second quarter of 2010 may remain flat or drop slightly because inventory levels at LCD TV vendors in China are currently 2-3 weeks higher than usual, according to sources from panel makers.

TV vendors in China built up their LCD panel inventories to high levels of about 7-8 weeks for the Lunar New Year holiday sales, while their normal inventory levels are usually four weeks, the sources said.

The holiday sales have digested about 1-2 weeks of the inventories, leaving them with higher-than-usual inventories currently, the sources said.

But as some panel makers are currently facing shortages of components and labor, and demand in the third quarter is expected to surge, they are encouraging clients to continue placing orders as usual for the second quarter, the sources added.

LCD TV sales in China totaled about 7-8 million units in January and February, the sources noted.

Demand from the China LCD TV market contributed to the recent surge in panel demand, with TV panel prices remaining stable in January and February. But it remains to be seen whether TV panel prices will drop in March, the sources said.

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