Monitor Panel Oversupply in 2020 Means Potential for Price Trend to Mirror 2019 TV Panels, Says TrendForce

• In consideration of profitability, panel manufacturers have decreased their TV panel shipment targets in 2020.
• The supply of monitor panels in 2020 exceeds demand by nearly 20%, meaning a price rebound is unlikely in the short-run.

The latest analysis from the WitsView research division of TrendForce shows potential for a small price hike in TV panels under (and including) 65 inches at the end of January, as demand rises and supply falls. In contrast, due to an increase in panel manufacturers’ shipment target and the continued capacity expansion in China, the supply of monitor panels in 2020 is projected to exceed demand by nearly 20%. In the short term, the price drop of monitor panels is unlikely to stop.

According to TrendForce, the continued capacity expansion of large-sized panels (Gen 10.5 and Gen 8.6) in 2019 resulted in a significant oversupply and rock-bottom TV panel prices. For instance, the price of 32-inch panels, with a 25% overall market share in 2019, fell to US$30 in December of the same year, a 25% decrease YoY compared to 2018 levels. As the prices of over 80% of TV panels are lower than their cash costs, many panel manufacturers respond by aggressively reducing their production capacities

The most effective way to address the oversupply of TV panels is to reduce glass input, including in the short-term, and to permanently shut down production capacities. In 2H19, SDC and LGD led the way by shutting down certain production lines. Starting from September 2019, panel manufacturers such as SDC, LGD, and CSOT began reducing their utilization rates in an effort to minimize the price drop of TV panels; this wave of capacity reduction lasted well into 4Q19. The 3Q19 capacity reduction was the equivalent of an 8% reduction in Gen 8.5 production capacity, which subsequently expanded to a 16% equivalent capacity reduction in 4Q19. The magnitude of these consecutive reductions, in addition to the excellent sales figures from Double 11 in China and Black Friday in North America, enabled the prices of TV panels under 65 inches to maintain a constant level and even rebound in November and December 2019.

Secondly, panel manufacturers set their 2020 shipment target with two goals in mind: raise profit or diversify the allocation of production capacity. As such, the overall 2020 sales target of TV panels has dropped because manufacturers are focused on selling large-sized TV panel products while decreasing the production of small-sized panels. On the other hand, monitors with higher margins have become the primary sales focus of panel manufacturers, most of whom have raised their shipment target for this product in 2020. As well, HKC has joined the fray on the supply side. Therefore, the supply target of monitor panels in 2020 is projected to exceed demand by nearly 20%, which creates pressure to reduce monitor panel prices even further. The prices of monitor panels will likely not see any signs of rebound before hitting cash cost levels.