Novatek, a major driver IC manufacturer in Taiwan, entered the iPhone 16 supply chain early this year and secured certification ahead of its competitor LX Semi. However, according to a report from Commercial Times citing sources, its Korean competitor, LX Semi, recently also obtained certification and, with strong support from foundries, is challenging Novatek’s exclusive supply position.

The same report continues to cite sources indicating that LX Semi remains the exclusive supplier for iPhone 16 Pro/Pro Max’s LG Display (LGD) OLED screens in the second half of the year, with significant acceleration in chip production starting in September. It is estimated that the order allocation between Novatek and LX Semi will be 55:45.

Industry sources cited by Commercial Times reveal that LX Semi has a closer partnership with leading foundries, compared to Novatek’s previous strategy of relying on established foundries. Reportedly, another sources confirms as well that LX Semi has recently been certified and, with support from foundries, will begin significant wafer production by the end of the third quarter.

Other industry sources cited by the report further pointed out that Apple’s OLED panels are supplied by Korean manufacturer LGD, while LX Semi was originally LG Group’s subsidiary. Therefore, after LX Semi obtained certification, they increased orders from LGD, thereby reducing the originally planned procurement of OLED driver ICs from Novatek. However, for Novatek, they still heavily rely on Apple orders. If shipments go smoothly, they are expected to further secure opportunities in other product lines, such as iPad OLED DDIs and Apple Watch.

Yet, concerns are also noted, as the report brought up that the momentum in TV applications accompanying sports events is expected to slow down. Additionally, subdued sales during China’s 618 shopping festival and a conservative attitude among brand manufacturers in the second half of the year may affect demand for components like DDICs.

Therefore, Novatek keeps investing in establishing OLED production lines in order to seek new breakthroughs, such as IT TCON (timing controller) products. These products are manufactured using a 12-nanometer advanced process to create efficient computing units, integrating UHD 240Hz LCD and OLED panel display compensation functions, targeting high-end laptops.

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(Photo credit: Novatek)

Entering the fourth quarter, demand for television panels has started to weaken steadily, prompting brand customers to request price reductions. However, from current observations, panel manufacturers are still implementing strict production rate controls, attempting to keep prices stable and minimize the possibility of price drops. Therefore, as of early October, television panel prices continue to show an overall stable trend. However, there have been recent indications of pressure on some distributors to lower prices for small-sized television panels, and whether this will lead to a loosening of prices in this segment remains to be seen.

Monitor brand customers significantly increased their inventory in the second and third quarters. Consequently, as we enter the fourth quarter, there are signs of weakening demand for monitor panels, and panel prices are no longer able to maintain the slight upward trend seen in the third quarter. Most panel manufacturers still operate at a loss in the Monitor panel product category. Therefore, it is currently anticipated that monitor panel prices in October will shift towards stability.

Notebook brand customers boosted their inventory momentum from the second quarter to the third quarter. However, as we enter the fourth quarter, and with actual demand from end-users remaining less than ideal, brand customers are showing an increasing trend in revising their panel demand downwards. Panel manufacturers are also finding it challenging to sustain the idea of pushing panel prices higher, which they had been doing over the past few months. In order to maintain customer relationships and ensure stable customer demand and orders, it is currently expected that notebook panel prices in October will also shift towards stability.

Source to YICAI, LG Displays (LGD) has decided to halt the sale of its 8.5Gen LCD panel production line in Guangzhou, China. Earlier this year, there were rumors about LGD seeking potential buyers for this facility. However, as of September 25th, LGD has announced its intention to cease the sale and aims to achieve full production capacity by the next year. This decision reflects the overall resurgence in the global LCD panel industry. Nevertheless, there remain concerns about the stability of panel prices, given the uncertainty surrounding increased panel production capacity and the recovery of end-user demand in the coming year.

Amid the shifting landscape of Korean panel companies expanding their LCD panel business and a diversifying global panel supply chain, China’s leading panel manufacturer, which currently holds over 60% of global LCD TV panel shipments, must tread cautiously.

The LGD Guangzhou 8.5Gen panel plant marked LGD’s first overseas panel production facility and held high expectations. However, due to an extended industry downturn lasting for the past couple of years, LCD panel prices plummeted below production costs. South Korea’s other panel leader, Samsung Display, even closed all of its LCD panel production lines. In response, LGD downsized its LCD panel business and planned to shift its focus towards OLED panels. In this context, the capacity utilization of LGD’s Guangzhou 8.5Gen LCD panel plant fell to half, and rumors of seeking buyers emerged.

However, by the end of June this year, LCD panel prices rebounded from their low point, returning to profitability. As we approach the final quarter of 2023, with the current LCD TV panel market in a profitable state, LGD plans to restore full production in 2024, increasing its LCD panel output from 7 million pieces this year to 16 million pieces next year.

The rebound in LCD panel prices this year is not solely due to high demand, shifting the industry from oversupply to demand-matching supply. It’s primarily because major LCD panel manufacturers have rigorously controlled production capacity and reduced output, gradually warming up panel prices and restoring profitability to the industry.

In 2023, BOE, TCL, and HKC are expected to account for more than 60% of global LCD TV panel shipments. TCL, in particular, announced a change in its operational strategy in July, shifting from full production to adjusting capacity utilization dynamically according to market demand. The revival of the panel market in the first half of this year was a result of supply-side adjustments and optimizations, as external demand didn’t experience significant growth.

With China’s National Day holiday approaching, research organizations such as AVC and GfK predict a year-on-year decline in China’s TV market during the holiday season. Next year, if demand in the consumer electronics market doesn’t fully recover, and LCD panel manufacturers significantly increase supply, there may be concerns about maintaining stability in LCD panel prices. LGD has been less inclined to engage in price wars, and this includes global players like LG Electronics, Samsung Electronics, and Skyworth, who have substantial shipments in the global TV market. However, in a stagnant market, if someone increases supply, others may be compelled to reduce shipments.

According to TrendForce Research, TrendForce reports that panel makers chose to maintain the surge in TV panel prices by controlling production as Q3 approached. Contrarily, brands, in their bid to sustain sales momentum, have not been able to transfer increased panel costs to consumers in the form of retail price hikes. This precarious balance has driven many brands to the brink of financial losses for Q3.

Notably, as international brands boost shipments gearing up for end-of-year celebrations, and with China’s Double 11 shopping festival stocking peaking at the end of September, an 11.9% increase in Q3 TV shipments is anticipated, amounting to 52.24 million units. Still, this falls 1.3% short of TrendForce’s previous estimates. The persistent rise in panel prices in 2H23 will compel brands to trim down on less profitable product lines. Consequently, the annual global TV shipment forecast has been revised downward to 198 million units, a 1.5% YoY decrease.

Next year, LGD’s increased supply of LCD panels could potentially impact partnerships between Chinese panel manufacturers and brand customers. In the context of a globally diversified TV brand supply chain, China’s leading panel companies are also accelerating their overseas expansion efforts. TCL smartphone and TV LCD module production capacity in India is already operational, and they are collaborating extensively with Indian and Chinese customers, with utilization rates reaching 70-80%.

On September 8th, BOE announced that its first-phase project in Vietnam and its Mexican plant have begun mass production for customers. BOE also disclosed plans to invest in the second-phase project in Vietnam, mainly targeting increased demand in Europe, North America, and Southeast Asia, while leveraging advantages in overseas manufacturing costs and tariffs to promote high-quality development of overseas business.

(Source: https://www.yicai.com/news/101866356.html)

Demand for stocking up ahead of the upcoming June 18th promotion is dwindling, and the TV panel market is gradually returning to normal levels. Panel manufacturers are carefully managing production rates to maintain a balanced supply and demand. As a result, TV panel prices are expected to continue their strong upward trend in May. Anticipated price increases include a $1 rise for 32-inch panels, $2 for 43-inch panels, $9 for 50-inch panels, $10 for 55-inch panels, $12 for 65-inch panels, and $11 for 75-inch panels.

As TV panel prices continue to rise, monitor panel prices are also showing signs of potential increases. Open Cell products, including VA and IPS panels, may see price adjustments ranging from $0.2 to $0.5 in May. The panel module market is well supplied, with different strategies among regional manufacturers. Only Taiwanese manufacturers have confirmed price hikes, while others remain cautious. The possibility of customers adjusting orders due to differing price strategies could result in shifting demand. Overall, mainstream panel module prices are expected to remain stable in May, with a chance of $0.3 to $1 increases for smaller sizes.

While overall notebook panel demand has been increasing month by month since 2Q23, most of it is driven by urgent orders. Due to the uncertain future demand outlook from brand customers, panel manufacturers are cautious about raising prices. Brand customers have replenished their panel inventory to a healthier level, but without proactive stocking, panel prices are unlikely to see a short-term improvement. In May, panel manufacturers can only maintain stable prices, and the possibility of price increases depends on clear signs of significant demand recovery from brand customers.

TV sales in China hit their peak in 2019, with 44.5 million units sold, but the market experienced a sharp decline in 2020. This was due to the previous marketing strategy of lowering prices to increase sales volume no longer being effective for small and medium-sized products. In response, brands shifted their focus to larger-sized products, specifically those with a screen size of 65 inches or above, which has accelerated the trend of larger TVs dominating the market.

Panel prices skyrocketed between 2020 and 2021, causing a significant price disparity for TV products during promotional events in China. In the 2021 618 promotion, 55-inch TV prices surged by 67% compared to the previous year, while 65-inch TVs increased by 50%, leading to a surge in demand for larger TV sizes. TVs with a screen size of 55 inches and above accounted for over 65% of the market share in China in 2021, and it is anticipated to reach 80% by 2022. With greater discounts, 65-inch TVs became the mainstream size in 2022, surpassing 55-inch TVs in sales volume and market share. The market share of smaller TVs (43 inches and below) fell from roughly 30% to 16%.

According to recent market research, the dominance of smart TVs has surged from 85% in 2016 to a staggering 98% in 2022. Additionally, the popularity of 4K TVs has risen rapidly, with an 80% market share in 2022, following their introduction in 2014. The shift towards these new TV standards has been fueled by ongoing price cuts in the retail sector and the growing demand for larger screen sizes.

The scale of promotions during China’s 618 and Double Eleven shopping festivals could be affected by the upward trend of larger screen sizes and the rise in panel prices in 2023. As a result, brands are expected to shift their promotional strategies towards larger TVs, particularly 75-inch and 85-inch models, which generate more revenue. Consequently, TV sales in China for this year are predicted to decline further by 1.7%, with an estimated sales volume of approximately 30 million units.v