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2023/01/11
The ongoing Russia-Ukraine military conflict and high inflation will continue to affect the global economy and politics during 2023 The recent decline of the global economy, in particular, has significantly dampened the outlook on sales of whole TV sets since the performance of the TV market primarily depends on consumer demand Therefore, TrendForce projects that shipments of TV panels will fall by 28% YoY to a total of 264 million pieces for 2023
However, the shipment performances of the LCD and OLED segments of the TV panel market will diverge dramatically during 2023 South Korean panel makers already started to leave the market for LCD panels in 2022 and are reorienting the focus of their product development efforts towards OLED Going forward, the growth and diversification of OLED offerings will definitely contribute to the increase in shipments of OLED TV panels Furthermore, Samsung Electronics has been proactive in the adoption of the QD OLED TV panels provided by Samsung Display Shipments of QD OLED TV panels are forecasted to increase substantially by 265% YoY for 2023 and thereby notably contribute to the projected YoY growth rate of 78% for the total OLED TV panel shipments in the same year The aforementioned development will also help slightly raise the OLED penetration rate in the TV panel market to 31% in 2023
Conversely, shipments of LCD TV panels will be more severely affected by the weakening economy This is because the LCD segment of the TV panel market has already reached maturity and is in plentiful supply Shipment of LCD TV panels are projected to drop by 31% YoY to 256 million pieces for 2023 However, the current market situation is favorable for panel makers to promote ultra large-sized TV panels despite the cautious demand outlook There are two reasons for this First, freight transportation fees are falling to their usual level Second, quotes for ultra large-sized TV panels have dropped to a sweet spot TrendForce is optimistic that the average size of LCD TV panels will grow this year The increase is currently estimated to come to 15 inches, thus expanding the average size of LCD TV panels to almost 50 inches
Chinese panel makers have a huge production capacity for LCD panels and remain highly competitive, so their collective market share for LCD TV panels is projected to climb further to 704% in 2023 Among them, BOE, CSOT, and HKC are expected to retain their positions as first, second, and third respectively in the ranking of LCD TV panel suppliers by shipments Chinese panel makers are also gaining a greater influence over the TV panel market as their supply concentration ratio continues to rise Turning to panel makers based in Taiwan, Innolux will be able to raise its market share for LCD TV panels to around 141% in 2023 The growth will be mainly attributed to the rerouting of the orders resulting from CEC-Panda scaling back its supply of 385-inch products As for AUO, its market share for LCD TV panels will also elevate slightly to 52% due to the growth of orders from its main clients
Regarding Korean and Japanese panel makers, LGD will see its market share for LCD TV panels retreat to 46% in 2023 since its P7 fab in South Korea produced its last batch of LCD TV panels in December last year Sharp has been facing weak demand for the products from its fabs in Japan, but more new products are being manufactured at its Gen105 fab in Guangzhou, China Taking account of these developments, Sharp’s market share is forecasted to reach 57% in 2023
TrendForce points out that based on current observations, the risk of a supply-demand imbalance is going to be higher for IT panels than for TV panels during 2023 Since TVs have larger screens, the consumption of production capacity proceeds at a faster pace for TV panels TrendForce is not ruling out the possibility that panel makers could adjust their product mixes to give more weight to TV panels if they find that the production capacity for IT panels has been idling too long Such development would certainly affect the future supply-demand dynamics of the TV panel market as well Moreover, panel makers will be under pressure to turn from loss to profit this year, so the strategy for adjusting capacity utilization rate will be very important to them If suppliers fail to maintain discipline, then the whole panel market will unlikely return to a balanced state in 2023
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/
2022/10/06
TrendForce indicates, overall utilization rate of LCD large generational fabs of Gen5 and above (in terms of wafer starts) slipping to 60% in 4Q22 cannot be ruled out, which would be the lowest level in the past ten years Sluggish panel demand and the fact that most panel makers have officially turned from profit to loss in 2Q22 are the key factors forcing panel makers to take a more rigorous approach to production control in 2H22
TrendForce states that the timing of purchasing volume adjustment on the part of IT brands lags relatively and its effect of shrinking orders quite sedate, resulting in the current market’s high inventory level still awaiting disposal Since Gen 5 to Gen 6 are the production centers of IT panels, 4Q22 utilization rate is expected to drop by 59 percentage points compared to 3Q22 to 482% due to weak demand
Although LG Display plans to close its P7(Gen75) production line in 1Q23, some products will be produced in advance of 4Q22, which will help bolster the production volume of Gen 7 to 75 TVs On the other hand, Innolux significantly reduced utilization rate in September as a response to market conditions In addition, leading monitor brands have increased the magnitude of purchase order correction in 2H22, affecting Gen7-75 production lines primarily focused on monitor panel wafer starts Therefore, utilization rate performance of Gen7-75 generational fabs is estimated to continue its decline and present a downward trend
HKC originally planned to increase wafer starts at each of its factories in 4Q22 However, due to some panel manufacturers recently planning to increase the price of certain TV panel sizes to accelerate the achievement of TV panel supply/demand equilibrium, the company has shifted to reducing wafer starts at all sites except its IT product focused Mianyang factory In addition, CSOT has also decided to take a one-week annual holiday in October, resulting in an estimated 16 percentage points quarterly decrease in overall Gen 8x utilization rate
Nearly 90% of Gen 10-105 production capacity is utilized for TV panels while only a small amount is used in the production of commercial display panels As quotations of 65-inch TV panels has been close to BOM cost, BOE and CSOT have decided to reduce production volume in response Wafer starts of BOE B17 in 4Q22 is expected to fall 142% compared to 3Q22, precipitating a 35 percentage points QoQ drop in Gen 105 utilization rate
As panel manufacturers implement production reduction plans in 2H22, the single-quarter supply-demand ratio has clearly settled and inventory deferred from 1H22 will experience declining levels along with significant drops in production Consumer demand will suffer as global economic and geopolitical risk remains high in 2023 Rising inflation will suppress consumer demand as the demand-side perspective remains neutral to conservative Although the supply side is constrained by the planned closure of LG Display, the addition of CSOT T9(Gen86) will drive overall panel supply higher compared to 2022 TrendForce indicates that this also means the market will continue to confront high oversupply risk next year If panel makers can maintain their low utilization rate strategy, it will be a great boon to the health of the industry
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/
2022/07/18
Moving into 2H22, terminal brands continue to adjust their inventory, not only weakening panel demand, but also inducing a sustained drop in panel quotations The sharp increase in operating pressure affecting panel manufacturers has forced the display industry to restrain production According to TrendForce's "Monthly Panel Supplier Utilization Report," utilization rate (calculated by the volume of glass input) in 3Q22 is expected to fall to 70%, a substantial decrease of nearly 73 percentage points from 2Q22
TrendForce indicates, border controls and lockdowns have led to a disruption of logistics and labor due to the impact of the pandemic in the past two years In order to avoid production and shipment gridlock, branded manufacturers overstocked from distribution channels to components However, as logistics and transportation conditions have improved, previously prepared materials have subsequently arrived in relevant warehouses or ports As pandemic induced demand subsides, terminal sales have suffered due to rising global inflation and the Russian-Ukrainian war As a result, the inventory problem continues to deteriorate and all aspects of the overall supply chain has entered red alert
Since this type of situation applied not only to a single application, utilization rate is reduced whether it is Gen5, primarily used in producing laptops, or large-size LCD monitors and TVs None of the large generational fabs were spared TrendForce indicates that the utilization rate of Gen5 to Gen75 is expected to decrease by 77% percentage points to 637% and the utilization rate of Gen8 to Gen105 will decrease by 7 percentage points to 75% in 3Q22 More than 90% of the Gen105 utilization rate used to produce TVs is expected to drop by 178 percentage points QoQ, which also highlights the continuing pessimistic demand for TV panels in 3Q22
As far as panel makers are concerned, depreciation and amortization pressure on Chinese panel makers is more severe than that of other panel makers due to the construction of new factories In addition, looking at total shipments of larger-sized applications (TVs, monitor panels, and notebooks), Chinese panel makers account for more than half the market, so when the bottom drops out, impact on these companies will be greater than on competitors Looking at the three leading Chinese panel manufacturers, although BOE’s capacity allocation is very flexible, a drop of 4 percentage points in overall utilization rate cannot be ruled out in 3Q22 At the same time, China Star Optoelectronics (CSOT) and Huike Optoelectronics (HKC) will not only readjust their older factories in 3Q22 but also slow the rate at which new factories ramp up The overall operating watermark of these two panel manufacturers is estimated to decrease by 133 and 74 percentage points, respectively
Although the pressure of depreciation and amortization on Taiwanese manufacturer AUO is small, in response to changes in market demand, the company had already started production adjustment in 2Q22 It is expected to continue implementing this strategy in 3Q22 with overall utilization rate falling to 50% On the other hand, Innolux expects overall utilization to drop by 67 percentage points QoQ Japanese panel manufacturer Sharp is at a relative disadvantage in terms of overhead, and its customer concentration is too high Its major branded clients have canceled orders, allowing inventory to stack up quickly Therefore, Sharp has only just announced that it will begin to aggressively scale-down in its Japanese production line in July In turn, the company’s overall utilization rate decreased by 263 percentage points to 593% in 3Q22 LG Display, a Korean panel maker, is expected to maintain a similar operating level as in 2Q22 after a sustained contraction in LCD production capacity due to a strategic shift
TrendForce indicates, if panel makers do not wish to face the risk of high inventories at the beginning of 2023, they should maintain reduced operations in 4Q22 in order to eliminate existing panel inventory Therefore, it cannot be ruled out that the utilization rate of LCD Gen5 (including) and above large generational fabs will maintain the same level of operation as in 3Q22 In the past, production cuts were the main response whenever the market was oversupplied However, with future production capacity still growing, the speed at which brands deplete their inventories and global political and economic trends will be key factors affecting the future display market If market conditions continue to deteriorate, it cannot be ruled out that the industry will face another reshuffle, setting off a further wave of mergers and acquisitions
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/
2022/06/09
According to TrendForce, LCD TV panel quotations bore the brunt of continuous downgrades in the purchase volume of TV brands and pricing for most panel sizes have fallen to record lows Recently, it was announced that the 32-inch and 43-inch panels fell by approximately US$5~US$6 in early June, 55-inch panels fell approximately US$7, and 65-inch and 75-inch panels are also facing overcapacity pressure, down US$12 to US$14 In order to alleviate pressure caused by price decline and inventory, panel makers are successively planning to initiate more significant production control in 3Q22 According to TrendForce’s latest research, overall LCD TV panel production capacity in 3Q22 will be reduced by 12% compared with original planning
As Chinese panel makers account for nearly 66% of TV panel shipments, BOE, CSOT, and HKC are industry leaders When there is an imbalance in supply and demand, a focus on strategic direction is prioritized According to TrendForce, TV panel production capacity of the three aforementioned companies in 3Q22 is expected to decrease by 158% compared with their original planning, and 2% compared with 2Q22 Taiwanese manufacturers account for nearly 20% of TV panel shipments so, under pressure from falling prices, allocation of production capacity is subject to dynamic adjustment On the other hand, Korean factories have gradually shifted their focus to high-end products such as OLED, QDOLED, and QLED, and are backed by their own brands However, in the face of continuing price drops, they too must maintain operations amenable to flexible production capacity adjustments
TrendForce indicates, in order to reflect real demand, Chinese panel makers have successively reduced production capacity However, facing a situation in which terminal demand has not improved, it may be difficult to reverse the decline of panel pricing in June However, as TV sizes below 55 inches (inclusive) have fallen below their cash cost in May (which is seen as the last line of defense for panel makers) and is even flirting with the cost of materials, coupled with production capacity reduction from panel makers, the price of TV panels has a chance to bottom out at the end of June and be flat in July However, demand for large sizes above 65 inches (inclusive) originates primarily from Korean brands Due to weak terminal demand, TV brands revising their shipment targets for this year downward, and purchase volume in 3Q22 being significantly cut down, it is difficult to see a bottom for large-size panel pricing TrendForce expects that, optimistically, this price decline may begin to dissipate month by month starting in June but supply has yet to reach equilibrium, so the price of large sizes above 65 inches (inclusive) will continue to decline in 3Q22
TrendForce states, as panel makers plan to reduce production significantly, the price of TV panels below 55 inches (inclusive) is expected to remain flat in 3Q22 However, panel manufacturers cutting production in the traditional peak season also means that a disappointing 2H22 peak season is a foregone conclusion and it will not be easy for panel prices to reverse However, it cannot be ruled out, as operating pressure grows, the number and scale of manufacturers participating in production reduction will expand further and it timeframe extended, enacting more effective suppression on the supply side, so as to accumulate greater momentum for a rebound in TV panel quotations
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/
2022/02/09
The Bureau of Industry and Security (BIS) of the US Department of Commerce recently issued the latest Unverified List (UVL) which includes ChuZhou HKC Optoelectronics Technology Co, Ltd, according to TrendForce’s investigations The announcement states that if US suppliers wish to ship products to companies on the UVL, they can still submit documentation to obtain a shipping license According to TrendForce’s understanding, the primary reason ChuZhou HKC is included on the UVL is that it plans to import panel-related analytical instruments from the United States in the near future, and actions taken by BIS are not indicative of the Chinese panel industry as a whole Currently, ChuZhou HKC is in the process submitting proposals and negotiating with its US material suppliers, thus TrendForce’s assessment is that there is no impact on the supply and shipment of ChuZhou HKC products for the time being
It should be noted that according to TrendForce statistics, HKC’s Chuzhou plant will account for only 38% of global LCD panel capacity in 2022, which is a fairly insignificant share However, this plant accounts for 30% of HKC's own capacity, thereby playing a pivotal role in company production The Chuzhou factory primarily produces TV panels and monitor panels, among which TV panels account for nearly 80% of the factory's production If the current ban cannot be resolved smoothly, it will impact shipments of HKC TV panels
In addition, the glass substrates used in HKC’s Chuzhou factory are sourced from multiple glass substrate suppliers, with approximately 40% coming from Corning, a US supplier Since Corning localized it production according to the location of panel makers, it is not expected to be limited by the restrictions on the export of US production to China enumerated on the UVL, but detailed regulations are still awaiting clarification At present, the supply of materials has not been affected, HKC’s Chuzhou plant maintains normal operation, and its clients have yet to move panel procurement away from the Chuzhou production line
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/
