TrendForce: Panel Oversupply Nightmare May Reemerge after 2014

According to the survey on the global large-sized TFT-LCD panel capacity by WitsView, the display research division of the global market intelligence provider TrendForce, the year 2013 is impacted by the waning demands for monitors and NBs, and panel makers aggressively apply the high value-added technologies to the Gen 6 and under, such as wide viewing angle, LTPS, touch sensors. The unstable yield, the equipment transformation, and the prolonged production process cause the capacity waste, and the capacity of the Gen 5 and above has been declining from 199.1 Mn m2 in 2012 to 194.1Mn m2, dropping 2.5% YoY. Among these, the Gen 5 has a 10.8% decrease, while it is a 4% drop for the Gen 6, and a 3% decline for the Gen 7/7.5.    

From 2014 to 2015, there are six to eight Gen 8.5 fabs that will start mass-production globally. Three new Gen 8.5 fabs will be operational in 2014, including SDC’s Suzhou plant, BOE’s Hefei plant, and LGD’s Guangzhou plant, the worldwide Gen 8.5 capacity is expected to grow 12.4% from 2013, and the global capacity will be expanded to 204.4Mn m2, rising 5.3% from 2013.

WitsView research manager Boyce Fan says that the newly-added capacity leads to several possible directions for the TFT-LCD industry developments. Firstly, the new capacity is concentrated on the Gen 8.5 fabs, meaning the large-sized panel supply is largely lifted, and the price pressure on the large sizes is inevitable to solve the excessive capacity problem. Meanwhile, panel makers will develop higher-profit products of new sizes, including the 48” and the 49” that would replace the 46” and the 47”. On the other hand, the product portfolio shift between fabs of different generations will be more obvious, the trend that the Gen 6 and under are served to produce mid-and small-sized panels is more evident, and what can be expected is that the Gen 8.5 will lift the production proportion of tablets, NBs, and IT products.   
  
The future newly-added capacity will mostly be concentrated in China, the country’s self-sufficient ratio will continue to rise, and the custom duty imposed to imported panels will be further discussed by the Chinese officials, which is a major potential concern for Taiwanese makers who haven’t invested and built plants in China. WitsView believes the impacts brought by the 2014 expansion will lead to the emergence of another oversupply nightmare, and how panel makers react will determine the result of the next wave of gains and losses. 

Figure: 2012-2014 Large-sized TFT-LCD Capacity Changes