The onset of the COVID-19 pandemic in turn generated a high demand for notebook computers. While demand began ramping up in 2Q20, subsequently resulting in a shortage in 3Q20 and 4Q20, the shortage in the notebook market has yet to be resolved even now, according to TrendForce’s latest investigations. The high demand for notebooks is estimated to propel the quarterly shipment of notebook panels to a historical high of 65.3 million units in 1Q21, which is a 3.5% increase QoQ and a 46.5% increase YoY.

With regards to supply and demand, TrendForce believes that the current shortage of notebook panels can primarily be attributed to the soaring market demand for notebooks. In terms of supply, notebook panel shipment underwent YoY increases of more than 20% during each quarter from 2Q20 to 4Q20. At the moment, panel orders from notebook manufacturers still exceed the order fulfillment capacity of panel suppliers by about 30-50%, as panel suppliers are bottlenecked by the shortage of certain semiconductor components, such as DDICs and T-cons.

Given the extremely tight supply of panels relative to demand, notebook panel prices have skyrocketed accordingly. Case in point, quotes for 11.6-inch panels, which are among the mainstream and are widely used for Chromebooks, are now closing in on quotes for 14-inch and 15.6-inch panels. As such, the high profitability of notebook panels have led panel suppliers to set more aggressive shipment targets this year.

In particular, after CEC-Panda sold its Nanjing-based Gen 8.5 fab and Chengdu-based Gen 8.6 fab last year, the company currently possesses a sole remaining Gen 6 fab in Nanjing. While this fab has never manufactured notebook panels in the past, plans for manufacturing 11.6-inch panels are now underway, with mass production expected to start in 2Q21, owing to the extremely high market demand for notebook panels. It should also be pointed out that HKC has been mass producing 11.6-inch panels since February 2021. The company is expected to start mass producing 14-inch panels in 2Q21 and 15.6-inch as well as 13.3-inch panels in 2H21. HKC aims to ship about 10 million notebook panels this year.

TrendForce indicates that the current demand for notebook panels will likely persist through 3Q21. However, as the shortage situation has persisted for more than three quarters since it surfaced in 2Q20, some notebook manufacturers may begin overbooking panel orders due to the expectation of further shortages. Therefore, if the actual market demand were met ahead of expectations, panel suppliers may potentially slow down their panel shipments in 2H21. Even so, the new normal brought about by the pandemic will continue to power the global digital transformation. For instance, in response to the digitization of distance learning, the education sector is expected to generate recurrent demand for Chromebooks. As a result, TrendForce has a positive outlook on the annual shipment volume of notebook panels for 2021, which is expected to reach 249 million units, a 10.5% increase YoY.

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

Among the various display technologies used for smartphones in 2021, AMOLED models are expected to account for a 39% penetration, thanks to smartphone brands’ increasing adoption of this technology, according to TrendForce’s latest investigations. In the entry-level and mid-range segments, the smartphone demand for a-Si LCD models remains strong, although this technology’s penetration rate is expected to undergo a slight decrease to 28%. On the other hand, LTPS LCD models are continuing to lose market share to competing technologies, resulting in a 33% penetration rate, while LTPS HD LCD models will occupy a growing share of this segment.

TrendForce indicates that smartphone brands’ procurement activities for components in 2H20 will persist throughout 2021 for two reasons: First, the industry on the whole expects demand for smartphones to ramp up considerably this year. Second, production capacities across the entire semiconductor supply chain have been tight, with some segments even showing severe shortage, thus prompting downstream clients such as smartphone brands to stock up on certain components in order to mitigate the potential risk associated with component shortages.

With regards to the development of smartphone display technologies, panel suppliers have been regaining client orders for rigid AMOLED panels through aggressive pricing since 2H20. Owing to increased adoption by smartphone brands this year, rigid AMOLED models are expected to maintain a strong market presence in the mid-range and premium mid-range segments. Flexible AMOLED models, on the other hand, will likely dominate the high-end and flagship segments. Going forward, AMOLED models will gradually cannibalize the market shares of LTPS LCD models in the mid-range and premium mid-range segments, in turn forcing LTPS LCD models into a lower price segment.

Market demand for entry-level and mid-range smartphones, especially for HD models, has remained strong since 2020, due to the impact of the COVID-19 pandemic. However, the supply of key components in these smartphones (including a-Si LCD panels as well as DDI and TDDI ICs) has been in shortage in light of the foundry industry’s tight production capacities. As prices of a-Si LCD panels and ICs spiked, panel suppliers saw this upturn as the perfect opportunity to fulfill the existing demand for a-Si products with LTPS products and in turn expend their production capacity for LTPD LCD panels. Smartphone brands began adopting a-Si HD and LTPS HD LCD panels interchangeably in an increasing number of models, thus giving TDDI ICs flexibility to be used in a greater number of compatible handsets.

At the moment, IC supply remains the greatest bottleneck in the overall smartphone supply chain; case in point, TDDI supply is tight to the point of shortage. TrendForce believes that two key factors will exert significant influence over the smartphone panel industry going forward: First, Chinese IC design companies are likely to obtain wafer input priorities in Chinese foundries thanks to government policies. These IC design companies may potentially experience considerable growth as a result and disrupt the predominant oligopoly of Taiwanese IC design companies in the smartphone panel market. Second, once the ongoing capacity expansion effort of Chinese foundries concludes, their additional production capacities will alleviate the current shortage of IC supplies, with IC prices subsequently entering a downward trajectory. As a result of lowered IC prices, the relationship between LTPS HD panels and a-Si HD panels will likely shift from complementary to competitive, with both product categories struggling for dominance in the HD smartphone model segment.

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