Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mark Sue - RBC Capital Markets.
Mark Sue - RBC Capital Markets
Jim, have you started to see retail inventory levels decline as we head into the holidays or is it too early to tell? And can we see a scenario where retailers don't have enough inventory? And conversely, if we don't get the sell through that we're anticipating, are there indications that the panel makers will move faster this time around to adjust their utilization rates?
Jim Flaws
We think retail inventories are appropriate right now. I guess you can imagine a scenario where demand is very strong and maybe there would be shortages, but right now we think they're at an appropriate level and that retailers have built a little to get ready for the holiday season in this country and in Europe, in particular.
It's hard for us to predict the reaction of panel makers to demand. I think everybody remembers last year when panel prices fell so dramatically, but we don't feel we're seeing a repeat of that, so we think it's unlikely that we'll see drastic reductions in utilizations. But it's difficult to forecast.
Mark Sue - RBC Capital Markets
And separately, Jim, as you have more visibility into your planning as your overall demand picture firms up for next year, how shall we think about operating expenses, R&D in particular, as we start 2010?
Jim Flaws
I think you'll see R&D levels be relatively consistent year-over-year, so I don't think you'll see a big shift there. SG&A will probably [inaudible] with inflation, but, again, I don't think you should expect to see big changes in SG&A.
Operator
Your next question comes from Christopher Muse - Barclays Capital.
Christopher Muse - Barclays Capital
Jim, I appreciate the outlook in terms of seasonal volume for the first half. I was hoping maybe you could comment on what you would expect for Display gross margins if what you presented occurs?
Jim Flaws
For which period of time, C.J.?
Christopher Muse - Barclays Capital
For Q1 and Q2?
Jim Flaws
Well, obviously, we hope to have no repeats of various upsets like the earthquake or the power disruption, so that's an improver to gross margin. We expect volume to grow at our Gen 10 factory, so that should help. And even though demand will be down slightly we're thinking that we will continue to run our tanks, so we should not be seeing a down draft from cutting off demand there. So I would say we expect gross margins to be better in Q1 versus Q4.
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