Last week, a power outage took place at NEG’s (Nippon Electric Glass) glass manufacturing facility located in Takatsuki, and the company promptly issued work stoppage at the plant in response, according to TrendForce’s latest investigations. TrendForce believes that, although NEG’s production capacity is expected to gradually recover, the incident will still lower the supply of large-sized glass substrates by 2.5% in 1Q21. As a result, quotes for large-sized panels, which have been in shortage for the past six months, will remain high in 1Q21 due to the power outage incident.
TrendForce indicates that TV panel quotes had previously shown signs of plateauing, but the NEG incident has not only brought the hidden risk of widening shortage in panel supply to the forefront of the market once again, but also compelled panel makers to adopt a more optimistic outlook regarding panel quotes. Case in point, the increase in TV panel quotes for December has slightly widened from the previous forecast of 2-3% MoM on average to the current level of 4-5% MoM on average. Looking ahead to 1Q21, TrendForce expects TV panel ASP to reenter a minor uptick, as opposed to the previous forecast of a flat trend, since the impact of glass shortage due to the NEG incident will come to fruition during the quarter.
Although the fluctuating supply of glass in the short run provides the necessary momentum for TV panel prices to once again skyrocket, the current state of the market would suggest that TV manufacturers will suffer increasing losses should the price hike take place, thereby harming the long-term partnership between panel makers and their TV manufacturer clients. Furthermore, TV panels are now substantially profitable for most panel makers. Taking these factors into account, panel makers are likely to gradually raise panel prices instead of introducing a sudden price hike, in order to strike a balance between supply shortage, profitability, and client relations.
With regards to desktop monitors, the shortage in NEG’s glass supply primarily affects IPS monitor panels and entry-level 19.5-inch TN monitor panels. As such, TrendForce believes that the NEG incident provides valid reason for the above products to see rising quotes. Even so, most panel makers will prioritize clarifying the degree of the NEG incident’s impact over capitalizing on the sudden shortage in glass supply this month. Therefore, the increase in panel quotes for the month of December will for the most part mirror November levels, at about 2-4% MoM.
With regards to notebook panels, on the other hand, TrendForce’s current data suggest that the NEG incident will have less of an impact on this product category than on TVs and desktop monitors, although the exact impact on quotes remains to be seen. Quotes for notebook panels this month are still expected to increase by 3-4% MoM at the moment. However, an additional 1-2% increase is possible should panel makers decide to adjust their production allocation given the limited supply of glass substrates, thereby indirectly leading to a reduction in notebook panel manufacturing and further exacerbating the shortage in notebook panels.