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2023/01/10
According to TrendForce’s analysis of the supply chain for display panels, demand slowed dramatically in 2Q22 and thereby caused inventory level to rise sharply for display driver ICs (DDIs) within a short period However, the market for DDIs is in a notably better state now in 1Q23 following two to three quarters of price decline, reduction in wafer input, and inventory consumption Moreover, the first quarter is the critical period when DDI suppliers set their wafer input quantities In order to effectively meet the demand for 2H23, DDI suppliers will need to finish arranging orders with their foundry partners by the end of 1Q23
Regarding the whole 2023, the general outlook on geopolitics and the global economy is still rather pessimistic Also, panel demand is not expected to climb back to the peak that it reached before the emergence of the COVID-19 pandemic However, TrendForce believes that since panel prices have pretty much hit the bottom, the panel market as a whole will recover gradually over the quarters Later, with the arrival of the traditional peak season in 3Q23, demand is anticipated to rise significantly in the panel market Hence, the corresponding demand for DDIs will rebound as well
According to TrendForce’s investigation, inventory began to surge for DDI suppliers in 2Q22, extending to more than 6 months DDI suppliers therefore had to immediately revise their wafer input quantities Working panel makers, DDI suppliers were urgently seeking a solution to clear excess inventory Turning to foundries, DDI suppliers were scaling back wafer input Even under the consequences of recognizing their inventory losses or compensating foundries for not meeting the terms of their long-term agreements, DDI suppliers were steadfast in reducing their existing stocks so as to minimize the impact from the rapidly deteriorating market situation
Based on TrendForce’s observations, DDI suppliers did manage to begin lowering their inventory levels Although they found that the general pace of inventory reduction was slower than they had hoped, the traditional peak season together with holiday-related promotions around the end of 2022 helped clear a notable amount of excess stock In case of DDIs for large-sized TV panels, a gradual return to an optimal inventory level is expected within 1Q23
Regarding the general price trend of DDIs, it was on a slide through 2022The cost pressure on DDI suppliers had been very heavy due to two major factors First, foundries had earlier raised wafer prices in response to the pandemic-related chip shortage Second, the demand freeze in 2Q22 caused an inventory pile-up Despite this strong cost pressure, DDI suppliers were compelled to slash prices because of the massive demand correction and the collapse of panel prices Hence, prices of DDIs fell by 5~10% for every quarter of 2022 Currently, prices of DDIs have returned to almost the level where they began their pandemic-induced rally in 2020 Apart from this, gross margin has also shrunk considerably for DDIs In this situation, most DDI suppliers are still compelled to cut prices further even if their foundry partners opt to not make significant concessions on wafer quotes In order to capture a steady flow of demand over the long run, DDI suppliers might even offer quotes that are below the market average for some transactions On the other hand, the erosion of gross margin has become notable, so there is a limit to how far prices can go down
TrendForce also points out that the lead time for DDI orders can extend to around three months To meet a panel maker’s demand for a particular quarter, a DDI supplier will have to be ready to make the corresponding wafer input no later than at the start of the quarter before Hence, a sudden shift in supply-demand dynamics is a potential issue that warrants consideration Presently, DDI suppliers are sticking with a conservative wafer input plan because they still want further lower their inventories At the same time, there are uncertainties as to the amount of demand that will be released in the future So, there is a risk of delays in wafer input for DDIs if foundries do not set aside sufficient production capacity to process orders for these chips After all, foundries could allocate more production capacity to other kinds of semiconductor components like power management ICs Under such scenario, an influx of orders from panel makers could lead to tight supply or even shortage
For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms Vivie Liu from the Sales Department at vivieliu@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/11/30
The adoption of the OLED display technology among smartphones is on a gradual rise According to TrendForce’s latest research, the penetration rate of smartphones that feature an OLED panel (regardless of whether the OLED panel is the rigid, flexible, or foldable type) is projected to climb from around 477% in 2022 to 508% in 2023 Then, by 2026, the penetration will climb above 60%
TrendForce says since Apple started to adopt OLED for iPhones with the release of the iPhone 12 series in 2020, other smartphone brands have also steadily increase the use of this display technology for their high-end device models Currently, all iPhone models under the main series are equipped with an OLED panel The models under the SE series are the only remaining ones that still have an LCD panel As for Samsung, half of its smartphone offerings have an OLED panel Chinese smartphone brands such as Xiaomi, OPPO, and vivo have also raised the share of device models with an OLED panel to 30~40% In sum, most smartphone brands plan to have OLED incorporated into more of their offerings, though Transsion is a notable exception as it targets Africa with affordable devices and thus has a relatively low adoption rate
TrendForce points out that Chinese smartphone brands previously did not actively widen the adoption of flexible OLED panels on account of two factors First, Samsung Display (SDC) had been able to sell rigid OLED panels to Chinese brands at lower prices because it is the sole supplier for this type of panel And because of favorable prices, Chinese brands preferred rigid OLED panels as they helped bring down the cost of a whole device Second, concerns about whether consumers can accept higher prices for their devices also affected Chinese brands’ willingness to use flexible OLED panels
When there was a shortage of rigid OLED panels from SDC during 2021, Chinese brands were unable to mitigate the supply risk as they lacked alternative sources for this component Taking lessons from this turn of events, Chinese brands have now teamed up with the major panel suppliers based in their home country to develop low-cost “ramless DDI flexible OLED panels” Prices of flexible OLED panels could drop sharply because of their joint efforts, perhaps even close to the level for prices of rigid counterparts Such development, in turn, could significantly increase Chinese brands’ willingness to use flexible OLED panels Besides reducing the potential risk of depending too heavily on SDC as the exclusive supplier, Chinese brands could also support their government’s localization policy and help domestic panel suppliers expand market share It is reported that Chinese brands are planning to incorporate flexible OLED panels into their midrange devices in the future
On the subject of foldable smartphones that are also equipped with an OLED panel, TrendForce estimates that unit sales of these devices will total around 128 million for 2022 The corresponding market penetration rate will reach around 11% Samsung is significantly ahead of other brands in the development of foldable smartphones, so almost 80% of the foldable smartphones that are now on the market belong to Samsung’s Flip and Fold series Chinese brands including Huawei, Xiaomi, vivo, and OPPO have also launched new foldable devices this year Although these devices have been noted for getting consumers’ attention with advances in performance and outward design, they have not achieved significant sales growth outside China this year due to the limitations of their distribution channels Given that the major smartphone brands will release new and upgraded device models at regular times each year, TrendForce currently forecasts that sales of foldable smartphones will total 185 million units for 2023, reflecting a market penetration rate of about 15%
TrendForce adds that the adoption of OLED panels among smartphones will continue to grow steadily in 2023 Both the releases of high-end foldable OLED devices and the uptake of low-priced, low-cost OLED panels will provide the consumption channels for the supporting panel production capacity, which will also expand over the quarters Conversely, LTPS LCD panels are approaching full maturity, so the demand for this type of panel will fall to a certain extent in the future due to the anticipated contraction of the smartphone market Under such scenario, the excess production capacity for LTPS LCD panels will be used to provide display solutions for other applications, such as automotive displays, industrial equipment displays, and IT displays Hence, suppliers for LTPS LCD panels are expected to speed up the development of market segments that are alternative to smartphone displays
For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms Vivie Liu from the Sales Department at vivieliu@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
