Continued oversupply in the LCD display industry has led to a decline in the YoY profitability of panel manufacturers. As one of the key countries leading the technological development of the global display industry, Korean panel manufacturers took the lead in announcing a cutback in LCD TV products and a transition to OLED distribution.

The capacity of OLED large generational fabs building gradually, market share seized through slight price reductions

In 2021, the production capacity of LG Display’s Gen8.5 line in Guangzhou and Paju, South Korea continued to climb, obviously contributing to an increase in shipments. In addition, as OLED pricing dipped and LCD pricing advanced, the price gap between OLED TV panels and LCD panels diminished to a multiple of 2.5 in January, with the differential narrowing to a multiple of 1.8 by the middle of the year. In addition to the dwindling price divergence, OLED TVs are positioned as high-specification products, priced higher than ordinary LCD TVs at retail. After the contraction in profits posted by LCD brands, these companies delved industriously into the OLED market, driving growth in annual shipments of OLED TV up as much as 70.8% to 8.0 million units.

Supply completely dominated by Korean panel manufacturers, the trend will change in 2024 at the earliest

As an industry leader, LG Display officially began mass production of white OLED TV panels in 2017. LG Display’s hold on the exclusive supply of OLED products was broken after Samsung Display officially mass-produced QD OLED TV panels at the end of 2021. However, due to differing technologies, LG remains an exclusive supplier in the realm of white OLED TV panels.

In terms of Taiwanese manufacturers, AUO and Innolux have focused on the rollout of Mini and Micro LED panels but have not put much effort into large generational fabs for OLED panels. Japanese panel makers Sharp Display & SPDG likewise have not given OLEDs much thought. In terms of Chinese panel makers, although these companies are actively building small and medium generational fabs for OLED panels, the rollout of large generational fabs for OLED panels is still relatively slow. Therefore, the entire market structure may need to wait until 2024, when TCL’s T8 Gen8.5 inkjet OLED production line hits heavy volume before there is a chance to see any changes. However, according to the capacity observation currently planned by TCL, overall supply will be quite limited in the initial stages. Although HKC’s Changsha plant has a planned production capacity corresponding to a large generational fab for OLED panels, there is no clear plan for a specific mass-production timeframe. Thus, TrendForce expects that Korean panel makers will remain the vanguard of the trend towards OLED TV panels in the next 3 to 4 years.

（Image credit: Unsplash）

The Bureau of Industry and Security (BIS) of the U.S. 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 U.S. 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 U.S. 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 3.8% 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 U.S. 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 U.S. 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@trendforce.com

Benefiting from expanded introduction of AMOLED mobile phone models by Apple, Samsung and Chinese brands, the market penetration rate of AMOLED panels for mobile phones in 2021 was 42%, according to TrendForce‘s investigations. In 2022, continuous investment undertaken by numerous panel factories to expand AMOLED production lines will drive AMOLED panel penetration rate to an estimated 46%. However, TrendForce further asserts that the continued tight supply of AMOLED DDI and the willingness of mobile phone brands to expand the use of AMOLED panels will be the keys influencing AMOLED market penetration rate next year.

Continued tightness in AMOLED DDI supply for mobile phones

The AMOLED DDI process requires dedicated medium voltage 8V processes at the 40nm and 28nm nodes. However, the supply of dedicated process capacity in 2021 is limited. In addition, Samsung’s Austin, Texas fab was shut down due to a snowstorm in early 2021, resulting in serious shortages of AMOLED DDI. New capacity in 2022 includes UMC at the 28nm node and SMIC at the 40nm node. However, since capacity and expanded capacity still cannot effectively meet the various brand’s demand for AMOLED DDI, Samsung’s fab will continue to reduce OLED DDIC production scale in the future. Stocking issues are expected to plague AMOLED DDI continuing into 2022.

TrendForce states, UMC’s primary expansion plan for 28nm AMOLED DDI will be completed by the end of 2023, so AMOLED DDI supply tightness is expected to be alleviated in 2023. In addition, other foundries have plans to develop dedicated AMOLED DDI processes but, due to a belated development schedule, these plans will not be able to address the AMOLED DDI shortage in 2022. Facing limitations on dedicated AMOLED DDI production capacity, traditional front-line DDI design houses are actively booking the majority of production capacity, while other DDI design houses are also competing for limited production capacity in order to enter the AMOLED panel factory supply chain.

Mobile phone brands expand their willingness to adopt AMOLED panels

Facing the gradual maturity of AMOLED panel technology and the continuous improvement of production yields, AMOLED market penetration rate will increase from 42% in 2021 to 46% in 2022. This will reduce the market share of LTPS panels in the mid-tier market and drive panel makers to transfer LTPS production capacity to medium size applications. However, mobile phone brands face the risk of AMOLED DDI continuing to being out of stock in 2022. In addition to the high price of AMOLED panels and the steady increase in the pricing of other semiconductor components, in order for mobile phone brands to maintain profitability and achieve annual shipment goals, TrendForce expects that a small number of AMOLED products may switch over to LCD panels to pad shipments in the mid-to-low-end mobile phone market, allowing LTPS panel makers to gain a bit of breathing room in the mid-end market.

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@trendforce.com

Display panels contain certain semiconductor parts, including driver ICs, TCONs, and LCD PMICs; the price trends of these ICs used in different applications depend on their respective supply and demand situations. Not only has demand for driver ICs used for TVs, Chromebooks, and consumer IT displays declined ahead of other applications, but panel suppliers have also accumulated a considerable inventory of driver ICs for these aforementioned products, according to TrendForce’s latest investigations. Hence, these driver ICs may see their prices stagnate in 4Q21. Nevertheless, although driver IC suppliers will not be able to offload the foundry costs for driver IC manufacturing to panel suppliers entirely, panel suppliers are still expected to procure additional driver ICs in order to avoid possible shortages, since demand for commercial IT displays and driver ICs used in these displays still exists. TrendForce therefore expects driver IC prices to experience a minor price hike in 4Q21.

It should be pointed out that certain TCONs and LCD PMICs are experiencing either shortages or excessive lead times. Furthermore, TSMC will raise the prices of their mature foundry process technologies in 4Q21 by a relatively high margin. Taking these factors into account, TrendForce expects TCON and PMIC prices to remain in an uptrend for the quarter. With regards to smartphone TDDI, the decline in client orders for 4Q21 means that smartphone TDDI will not continue to undergo a price hike in 4Q21. Conversely, smartphone OLED DDIC prices are likely to remain bullish in 4Q21 for the following reasons: First, foundries’ production capacities for smartphone OLED DDIC are currently insufficient. Second, this product category involves a high level of technological barrier to entry in terms of IC design, meaning there are very few IC design companies capable of offering a stable supply of OLED DDIC; smartphone manufacturers are therefore scrambling to book OLED DDIC orders for next year’s handsets.

On the other hand, IC design companies have traditionally sold driver ICs, TCONs, and PMICs as a bundle to panel suppliers during shortages because bundling these components not only increases their sales volumes, but also ensures that panel suppliers receive these components in matching inventory levels. Despite rumors pointing to a possible price hike of driver ICs, TrendForce believes that, given the ongoing shortage of TCONs and PMICs, products sold as a bundle are likely to undergo successful price hikes.

After experiencing component shortages for more than a year, panel suppliers are projected to more carefully address issues of IC procurement and inventory management. On the whole, driver IC prices for 4Q21 will likely remain relatively unchanged from the previous quarter. Looking ahead to 2022, TrendForce expects the demand for display panels to trend downwards during the cyclical downturn of 1H22. This bear market, along with the fact that display manufacturers still need to use up their existing inventory of display panels, means that panel suppliers will almost certainly revise down their driver IC procurement. At the same time, as certain foundries gradually ramp up their driver IC production, the gap between supply and demand of driver ICs will in turn diminish. In other words, potential risks of driver IC shortage will also become slowly mitigated. For driver IC suppliers, their primary challenge for 2022 will be the ability to dynamically adjust their operations between peak demand and low demand periods. Consequently, IC suppliers that possess more robust operations and more diverse product portfolios will also hold the competitive advantage.

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@trendforce.com

The impact on display panel production in China caused by the ongoing power outage has been manageable, although assembly plants in the downstream supply chain and component makers（for metal and plastic parts, for example）in the upstream supply chain have had to suspend operations as a result. Nevertheless, assuming these work stoppages conclude by the end of September, the aforementioned companies in the downstream/upstream supply chains will likely be able to make up for their lost production capacities by issuing overtime work. Hence, the power outage’s impact on their operations is ultimately expected to be rather limited.

In addition, it appears that the power outage will NOT affect the installation of new production capacities at all. However, given that power outages have continually taken place in cities including Guangzhou and Suzhou, attention needs to be paid to whether such power outages become a regular, cyclical occurrence for various cities in the future, especially without prior warning. Frequent, unannounced power outages may pose a challenge to panel manufacturers’ capacity allocation efforts.

（Image credit: Unsplash）