TrendForce Reports Average Size of TV Panels Grew to 44.7 Inches in Second Half of 2017; TV Brands Shift Their Demand to Larger Size Segments Due to Cost Pressure

• LGD topped the shipment ranking of TV panel suppliers for 1H17, posting a small year-on-year decrease of 1.1%.
• SDC posted a 14% year-on-year drop for its TV panel shipments in 1H17, the largest decline among the six major TV panel suppliers.
• Panel demand from TV brands has shifted towards larger size segments, leading to a 1.7-inch increase in the average panel size in 1H17 to 44.7 inches.

The latest research by WitsView, a division of TrendForce, finds the global shipments of LCD TV panels totaled 123.35 million units for the first half of 2017, amounting to a tiny dip of 0.1% compared with the same period a year ago. Since Samsung Display (SDC) closed its Gen-7 fab L7-1 at the end of 2016, TV brands since the first quarter have been vigilant against the supply tightening in the mid-size segments and kept stocking up. Their demand was strong enough to offset the traditional seasonal effect during the year’s first half.

Prices of panels belonging to the 40- to 43-inch size range rose by nearly 70% on average this April from their lowest point a year ago. As there is no profit selling products carrying panels in this size range, TV brands have shifted their demand towards larger size segments. Thus, the average size of TV panels reached 44.7 inches in the first half of 2017, up by 1.7 inches from a year ago. The global shipments of TV panels in total area for this year’s first half also grew by 8.7% year on year.

Iris Hu, research manager of WitsView, stated that TV makers will be more conservative in their panel procurement in the second half of 2017. “Though the TV panel market is entering the traditional peak period for stock-up activities, TV makers are finding that the excessively high panel cost is severely compressing their profit margins,” said Hu. “Also, more than 60% this year’s newly added panel production capacity will become available in the year’s second half. The steady expansion in the overall supply will create the condition for a significant downward price correction.”

According to WitsView, much of the TV panel demand will continue to concentrate in size segments 55 inches and larger in the latter six months of 2017. Shipments for the period is projected to increase by 4.1% in volume compared with the year’s first half as China’s BOE Technology (BOE) and HKC have taken on additional production capacity since the second quarter. Specifically, BOE has expanded the capacity for 43-inch panels at its Gen-8.5 fab in Fuzhou, while HKC’s Gen-8.6 fab in Chongqing has raised its 32-inch capacity. The total shipment area is also projected to increase by up to 10% compared with the year’s first half.

LGD led in TV panel shipments for the year’s first half while Innolux climbed to second place

LG Display (LGD) topped the shipment ranking of TV panel suppliers for the first half of 2017. LGD shipped about 25.28 million units during the period, representing a small year-on-year decrease of 1.1%. On the other hand, the demand growth for large-size panels led to a year-on-year increase of 5.7% in the corresponding total area. LGD was therefore the champion in both volume and area.

LGD’s TV panel shipments were affected by the conversion of its Gen-8.5 fab in South Korea’s Paju from producing LCD to OLED products. Furthermore, the panel maker adjusted its product mix to allocate more production capacity to monitor panels sized 23.8 and 27 inches. This move, which also interfere with TV panel production, was to meet monitor brands’ demand for larger panels that will help increase their profits. However, LGD at the start of this second quarter undertook the expansion of its Gen-8.5 fab in China’s Guanzhou. As that fab operates with more available capacity, LGD will have greater flexibility in balancing the production of various products during this year’s second half.

Innolux adjusted the product mix for its two Gen-6 fabs, expanding the production capacity for the 65-inch panels while reducing the capacity for the 39.5-inch segment. The move increased both profit and shipments for the panel maker. Innolux’s TV panel shipments for the first half of 2017 totaled around 20.25 million units, representing a year-on-year increase of 2.2%. The panel maker jumped to second place in the ranking.

TV panel shipments fell substantially for BOE and SDC in the year’s first half

BOE Technology (BOE) shipped just 19.5 million units of TV panels in this year’s first half, registering a year-on-year drop 13.1%. BOE has benefitted from more orders for 32-inch panels since this second quarter as Chinese TV brands increase exports of products related to this size segment. However, BOE from the end of last year’s third quarter has also kept lowering the share of the 32-inch in its product mix to expand its shipments of notebook panels.

SDC posted a 14% year-on-year drop for its TV panel shipments in the first half of 2017, totaling only 18.41 million units. SDC’s decline was the largest among the six major TV panel suppliers. After the closure of the L7-1 plant, SDC’s monthly shipments of 40-inch products contracted by about a million units. Also, the panel maker overhauled existing fabrication lines and installed new equipment during the year’s first half for the manufacturing of high-end UHD, 65-inch and 75-inch panel. SDC’s production capacity was therefore severely limited in the period.

CSOT continues with its capacity expansion while AUO raises the yield rate of its Gen-8.5 fab

TV panel shipments from China Star Optoelectronics (CSOT) totaled 18.17 million units in the first half of 2017, up 22.2% year on year. This growth was attributed to the capacity expansion of its second Gen-8.5 fab T2 in Shenzhen, China. The T2 plant mainly produces 55-inch panels, and correspondingly CSOT posted a 46.8% year-on-year increase in its 55-inch shipments for this year’s first half. Growths in this size segment also contributed to a 28.7% year-on-year increase in CSOT’s total shipped area for the six-month period.

AU Optronics (AUO) grew its TV panel shipments by 2.2% year on year in the first half of 2017, totaling around 13.28 million units. AUO has improved the yield rate and production volume of its Gen-8.5 fab L8B, which is located in Taiwan’s Taichung City and underwent an expansion last year. Furthermore, AUO concentrated the production of 65-inch panels at its Gen-6 fab L6B, which is located in Taiwan’s Taoyuan City. The panel maker was able to optimize the production flow of L6B despite the plant’s limited capacity. As a result, the panel maker was able to push up its 65-inch shipments for the first half of 2017 by 42.9% year on year. The company has remained competitive despite having smaller production capacity compared with the other five major suppliers.