China’s top panel makers, including BOE, TCL CSOT, HKC, and CEC-CHOT, are cutting production to support TV panel prices. Speculations indicate a capacity utilization drop below 60% in the first quarter, benefiting Taiwanese panel companies like Innolux and AUO. Despite these efforts, industry sources caution of a panel industry slowdown due to reduced demand, possibly resulting in lower TV panel prices, reported by TechNews.

The memory industry saw a big downturn due to major players like Samsung, SK Hynix, and Micron drastically reducing production. This resulted in a surge in memory prices and a gradual recovery for the entire memory industry. Panel makers may adopt a similar strategy to boost the overall panel industry as well.

Chinese panel companies currently command a global market share of over 70% in TFT-LCD, with the world’s top 3 LCD panel makers from China: BOE, TCL CSOT, and HKC. As China holds the largest share of panel production capacity, a reduction in production by major players could have a more substantial impact on the panel industry compared to the effects on the memory industry caused by Samsung, Micron, and others.

According to TrendForce’s report in November, BOE began adjusting its production levels in the Q3 and will continue to do so in Q4, with an estimated decrease of 7 percentage points in utilization rates. CSOT, on the other hand, maintained high utilization rates in Q3, supported by major customer stockpiling and the ramp-up of the T9 new production line. However, due to reduced procurement of TV panels by both in-house group brands and international frontline brands, CSOT’s utilization rate is expected to decrease by about 17 percentage points to 76% in Q4.

HKC, which still has two production lines not running at full capacity, anticipates a 14 percentage point decrease in its utilization rates for Q4. This is primarily due to the need to reduce production of one of its main products, the 32-inch TV panel, to alleviate inventory pressures and avoid significant price drops.

In response to this, both Innolux and AUO express their intention to dynamically adjust production capacity utilization in line with market conditions. This strategic flexibility is aimed at fostering a more robust and balanced industry order.

Overall, most panel makers are adopting a more conservative approach to production for 1Q24. Furthermore, several panel makers have indicated a two-week Lunar New Year shutdown for 2024. As a result, TrendForce anticipates that overall Gen5+ LCD panel utilization rates may be revised down to 70% or lower in 1Q24 to maintain the market supply-demand balance.

(Image: BOE)

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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

In view of aggressive procurement activities for panels used in various applications, TrendForce forecasts a 2% glut ratio for the large-sized TFT-LCD panel market for 2021, representing a supply and demand situation that ranges from “healthy” to “slightly in shortage”. As a lack of components constrained panel shipment in 1H21, the overall panel market during this period had a 1.2% glut ratio, which was lower than the average range of 2.5-3% and represented a supply shortage in the panel market. Hence, panel prices were driven into an uptrend for the first half of the year.

Regarding the glass input of panel suppliers for 1H21, despite the tight upstream supply of glasses due to certain work safety-related accidents, the overall capacity utilization rate of panel suppliers remained above 80%. Furthermore, as newly installed capacities, including CSOT’s T7 fab and HKC’s production lines in Changsha, kick off production, large-sized TFT-LCD glass input by area grew to 117.8 Mn2 (million square meters). On the other hand, owing to the proliferation of the stay-at-home economy last year, most display brands carried a relatively low level of inventory, which prompted them to ramp up their panel procurement. However, owing to a shortage of ICs, panel glass shipment (by area) for 1H21 reached a mere 116.4 Mn2.

TrendForce expects two developments to take place in 2H21: First, the arrival of the traditional peak season for monitors in 3Q21 means that demand for IT panels will still remain above a certain baseline; second, there is an ongoing trend for TVs to shift towards large-sized form factors. In light of these factors, although panel suppliers are expected to install significant amounts of production capacity in 4Q21 and thereby drive the glut ratio of panels to 2.6% for 2H21, this overall glut ratio is still within a healthy range. Nevertheless, as suppliers gradually ramp up their newly installed capacities, the quarterly glut ratio of panels is expected to increase by 0.5% from 2.4% in 3Q21 to 2.9% in 4Q21. Not only is 2.9% the highest quarterly glut ratio in 2021, but it is also the second highest since 1Q20, during which the onset of COVID-19 led to an oversupply of panels at a 7.5% glut ratio. TrendForce therefore believes that peak demand in the panel market has already passed.

Regarding the glass input and shipment by area for 2H21, certain panel suppliers are expected to perform routine fab maintenance during the holiday season. Even so, as Gen 10.5 production lines from certain suppliers and various other production lines from HKC begin ramping up capacities, the overall large-sized TFT-LCD glass input area is expected to massively increase by 5.9% compared to 1H21 to 127.2 Mn2 in 2H21. In particular, 4Q21 will see the highest quarterly glass input by area, at 64 Mn2. As previously mentioned, the shift towards larger-sized TFs and the persistent demand for IT products are expected to propel the overall demand for large-sized TFT-LCD glass in 2H21 to 123.9 Mn2, which is 1.4% higher than 1H21.

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 stay-at-home economy generated by the COVID-19 pandemic has resulted in persistent demand for IT products such as monitors, according to TrendForce’s latest investigations. However, the shortage of monitor panels has been increasingly severe since non-IT panels have been occupying most of manufacturers’ production capacities, while foundries’ wafer capacities dedicated to IC products have also become increasingly strained.

Furthermore, Samsung Display (SDC) is set to shutter its panel manufacturing operations within 2021, during which its monitor panel market share is expected to drop to 1% from last year’s 12%, and as the ownership of CEC Panda’s Gen 8.5 production line transfers to BOE, other panel suppliers are likely to benefit from these events.

Looking ahead to the activities of various panel suppliers throughout 2021, TrendForce analyst Anita Wang indicates that CSOT will be the main beneficiary of SDC’s exodus from the panel manufacturing business. By acquiring SDC’s Suzhou-based Gen 8.5 production line, maintaining its capacity expansion efforts, and taking additional orders for curved VA panels this year, CSOT is likely to double its monitor panel shipment in 2021 compared to the previous year.

HKC, on the other hand, is currently preparing to enter the monitor panel market. Not only does HKC have sufficient production capacity for VA, IPS, and TN products, but the company is also primarily focused on offering open cell panels, meaning HKC’s business model coincidentally complements both monitor ODMs and Korean monitor brands, which primarily manufacture their products in-house. Should HKC’s mass production schedule proceed as planned, its monitor panel shipment for 2021 may exceed 10 million units. Nonetheless, in spite of the massive planned increase in panel production by both CSOT and HKC, the shortage of IC components remains a major bottleneck constraining the two companies’ shipment this year.

Thanks to the acquisition of CEC Panda’s Gen 8.5 production line, as well as BOE’s existing panel capacity, BOE, the largest monitor panel supplier in the world by shipment, is expected to raise its market share from 26% in 2020 to 31% in 2021, thereby widening its lead over second-ranked LGD. Going forward, BOE will attempt to maximize its competitive advantage in the industry by fully integrating and optimizing the Gen 8.5 production line it acquired from CEC Panda.

Apart from efforts by CSOT and HKC to increase their respective panel supplies, SDC is also planning to extend its panel manufacturing operations. In 2021, SDC is expected to produce about 1.1 million units of panels, all of which will be supplied to the other Samsung subsidiaries. Similarly, LGD will increase its production capacity for monitor panels in response to increased profits from these panels, along with the fact that its clients have been redirecting their orders for IPS panels from SDC to LGD. LGD is expected to revise up its targeted shipment of monitor panels for 2021 to 38 million units, although the power outage at NEG’s glass fab at the end of 2020 may cause LGD to defer its scheduled capacity expansion plans in 1Q21.

AUO is currently focused on increasing its production capacity for curved panels owing to high demand from monitor brands. AUO’s market share in this product category is expected to close in on 50% this year. Likewise, the company is expected to raise the market share of its monitor panels to 18% because demand for gaming monitors and curved monitors has been strong, and because AUO is expected to invest more resources in monitor production. Finally, Innolux (INX) will focus on improving the product structure of its monitor panel offerings this year, while increasing the per-area price of its panels. Hence, Innolux has been making an aggressive push to raise the allocation of large-sized, IPS, and gaming products within its overall product shipment.

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