reports that panel makers are gearing up to transition from losses to gains in 2H23 by rigorously controlling production levels and producing on demand. The supply-demand ratio for Gen 5+ LCD panels in 2023 is predicted to be 2.1%—falling short of the balanced range of 3–5%—indicating a tight supply in the overall market.
TV sales performed poorly in 2022 as a result of high inflation. Furthermore, high shipping costs for large-size TVs not only led to a reduction in panel demand but also caused panel prices to fall. Consequently, starting from 3Q22, panel makers adjusted their business strategy by initiating significant capacity adjustments to expedite inventory turnover and alleviate operational pressure. After two-quarters of stringent control measures, 1Q23 saw an appreciable reduction in inventory levels for both TV and IT panels. A seasonal slowdown in the first quarter saw the supply-demand ratio increase from -7.1% in 4Q22 to 0.6% in 1Q23, still below a balanced mean of 3%. As such, the market continues to remain in tight supply, laying the foundation for subsequent increases in panel prices.
TrendForce data reveals that there was 13% QoQ growth in major glass production lines in 2Q23. However, stocking demand for a number of applications also synchronously surged by 13.6%, leading to an almost steady supply-demand ratio of 0.5% compared to 0.6% in the first quarter. With the market supply under continuous strain, the prices of LCD TV panels, which comprise roughly 80% of the panel market capacity, continue to remain steady.
Panel makers are expected to increase production in the third quarter as financial pressures improve, but production control will continue as long as suppliers are unable to turn profitable in a single quarter. The supply-demand ratio is expected to rise to 3.3% in 3Q23, reaching a balanced range. The fourth quarter will be the final push for shipments this year. If panel makers wish to be profitable in a single quarter, they will need to diverge from previously strict strategies of controlling production in favor of pursuing profits. This could push the supply-demand ratio to potentially rise to 3.7%—well within the balanced range. It’s worth noting that TrendForce believes that the current supply-demand ratio for TV panels fails to fully reflect true market conditions. Instead, it has mostly become dependent on panel makers’ cautious control of production capacity over the past year. The capacity utilization rate of panel makers and fluctuations in terminal sales in 2H23 will be the key to determining market trends.
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