lcd panel supply chain in stock

As revealed in DSCC’s latest release of the OLED Shipment Report – Flash Edition, OLED panel revenues decreased 3% Y/Y in Q4’22 to $12.6B as a result of a 7% Y/Y shipment decline. In Q4’22, by select OLED applications: •Smartphones increased 3% Y/Y in units and in revenues; •TVs decreased 4% Y/Y in units and 12% in revenues.

First, the bad news. We downgraded 2023 display equipment spending in the Q1’23 issue of our Quarterly Display Capex and Equipment Market Share Report another 13% to just $3.8B, the lowest since 2012. The decline can be attributed to weak end market conditions which are causing panel manufacturers to push out capacity increases. Display demand remains soft with too much demand pulled into 2020 and 2021 during COVID along with inflation and slower economic growth further weakening 2022 and 2023 demand. You can see in the chart below that demand on an area basis was pulled in vs. our 2020 forecast by 2% in 2020 and by 3% in 2021.

After LCD TV panel prices hit bottom in September 2022 and prices for several sizes increased in Q4, the rally in prices proved to be short-lived and prices have been in a holding pattern, with no changes from December into February. While prices for most sizes increased in Q4, the increase was modest. The last phase of the downward spiral in panel prices was characterized by a massive inventory drawdown in the display supply chain and a corresponding massive reduction in fab utilization by panel makers.

The iPhone 14 Series is unquestionably one of the few bright spots in the 2022 and 2023 smartphone market. It has allowed Apple to gain share and even boost its blended ASPs vs. the iPhone 13 Series despite the downturn in the economy. In the following charts, you can see their monthly panel procurement results obtained by DSCC through its supply chain sources where the iPhone 13 series in 2021-2022 is compared with the iPhone 14 series in 2022-2023. As indicated:

Although the FPD market continues to face difficult market conditions, automotive panels will continue to grow in 2023, with total shipments (LCD + OLED) expected to exceed 200M panels, which means an average of more than two panels per car. The market should continue to grow steadily as the rate of electrification increases.

The slowdown in display fab utilization that started in Q2’22 has bottomed out but the recovery in the first part of 2023 is slower than we expected, according to the latest release of DSCC’s Quarterly All Display Fab Utilization Report issued this week. The 2022 downturn was the most severe since 2008, and arguably the most severe ever, resulting from the post-pandemic slowdown in demand combined with excessive inventory in the display supply chain. That inventory has been diminished by slower utilization in the second half of 2022, but it remains at elevated levels, hindering the industry’s recovery.

Panox Display has built good relationship with major LCD manufacturers, and always stocks enough goods according to the changing in the market. Most of them can be continuously supplied.

Fluorinated greenhouse gases (F-GHGs) are among the most potent and persistent greenhouse gases (GHGs) contributing to global climate change. These gases play a vital role in the manufacture of flat panel displays--most commonly liquid crystal display (LCD) panels--that go into televisions, computer monitors, and many other display products. The overall climate impact of the millions of display products used can be greatly reduced if suppliers of these components take steps to mitigate release of these F-GHGs to the atmosphere. While progress is underway, your awareness and support as a brand, retailer, or institutional buyer can expedite this effort. This webinar explained the manufacturing processes which release F-GHGs into the environment, how LCD suppliers are working to reduce their emissions, and the steps participants can take to support further improvements.

In this context, the global consumer electronics market where LCD is located is affected in many ways. First of all, due to the pull of the economy, purchasing power can still remain strong, especially the commercial and education market demand in the North American market will remain relatively strong. There is also a downside. Due to the promotion of consumer demand in the early stage, especially the resident assistance policy, the phenomenon of demand overdraft has already occurred, and consumer demand will be affected by demand overdraft, and the future trend is not optimistic.

From the perspective of LCD panel shipment performance, according to the shipment performance of the four major mainstream LCD applications such as TV, Monitor, Notebook, and Mobile in 2021, it shows the characteristics of “weak at both ends and strong in the middle”. Looking forward to 2022, the shipments of LCD for mobile phones are expected to remain relatively stable, while the shipments of large-size LCD panel applications such as Notebook, Monitor, and TV have experienced a year-on-year decline of varying degrees due to the fading dividends of the epidemic, but the shipment area of large-size panels has performed significantly better than performance in terms of shipments. From the perspective of notebook LCD shipment performance, it is expected that the shipment area in 2022 will decrease by 3.8% year on year, and the decline in the area is lower than the decline in quantity. The shipment area of Monitor and TV panels can still maintain relatively good growth. The area growth brought about by large size is still the most effective way for LCD panel manufacturers to reduce production capacity.

Among large-size LCD applications, TV panels are the absolute main force in reducing production capacity. From the perspective of the shipment area in the first three quarters of 2021, TV panel shipments account for more than 70% of all application panel shipments. In the future, it is expected that the global display panel market will still exhibit cyclical fluctuations, and TV panels will still undertake the important task of reducing production capacity. Since the second half of 2020, the LCD panel price, especially the increase in the price of large-size panels, has driven the profitability of LCD manufacturers to improve significantly. At present, manufacturers are still in a period of high profitability. Of course, it cannot be ignored that the price of large-size panels continues to decline. It is expected to face profit challenges in 2022. The profitability of LCD manufacturers will face differentiation, and some manufacturers may fall into loss expectations.

From the perspective of production capacity investment, investment in the global display panel market will show two characteristics: first, the pace of investment in new LCD lines by panel manufacturers has slowed down significantly; second, investment in OLED will remain active, but the direction of investment in OLED will change. Significant changes occurred.

First of all, it turns out that panel manufacturers are very active in investing in small-sized OLEDs, especially flexible OLEDs. The future investment strategy will shift from small-sized to medium-to-large-sized, and from low-generation (6th generation) to mid-to-high-generation lines. According to statistics, it is expected that three 8.5-generation OLED production lines will usher in mass production by 2025. At the same time, the change of OLED investment direction will also change from the original Flexible OLED to multi-technology, WOLED will continue to expand production, and QD-OLED production capacity will continue to increase. At present, panel manufacturers represented by Korean factories（SAMSUNG & LG） are very active in investing in Hybrid OLED. Statistics show that it is expected that the global OLED display panel production area will continue to grow by more than 10% by 2025, especially with the gradual mass production of high-generation OLED production lines. It is expected that QD-OLED and Hybrid OLED will play an increasingly important role in the global OLED panel market from 2023.

Although the investment pace of panel manufacturers in LCD panels has slowed down, Chinese panel manufacturers still maintain a positive strategy for the expansion of existing production lines. The expansion of production will also drive the continuous growth of the supply area of LCD panels. According to statistics, it is expected that the global display panel production capacity will reach a high-speed growth of 12% year-on-year in 2022, and the overall production capacity growth rate will reach the largest increase since 2013. Therefore, it can be predicted that the pressure on panel manufacturers to reduce production capacity in 2022 should not be underestimated.

How will the global display industry pattern evolve? In 2021, an obvious “one superpower, many strong” competition pattern has been formed. BOE maintains a very clear leading edge in all applications. The market share of each application market has exceeded 20% in terms of the number of shipments and shipment area, and the leading edge is obvious. There is an imbalance in other panel manufacturers. Most manufacturers have certain competitive advantages in some fields, but the overall competitiveness is still not strong. For example, TCL (CSOT) and HKC can maintain a market share of about 15% in the TV panel market. It cannot be ignored that the performance of the IT application panel and the Mobile application panel is still relatively weak. Under this competitive landscape, it is expected that Chinese panel manufacturers including TCL and HKC will adopt active strategies for LCD applications other than TV in the future, including the expansion of existing production lines, and strive for opportunities to increase investment in new production lines.

Let’s look at the evolution of the competitive landscape of OLED. At present, OLED technology, especially in mobile phone applications, has gradually gained popularity. According to statistics, the overall proportion of OLED in the global smartphone shipments will reach nearly 40% in 2021, and will continue to grow in the future. The proportion will be close to 50% before 2025. In particular, the penetration rate of flexible OLEDs in mobile phone applications has shown a trend of significant growth. In 2021, the overall proportion will reach 22%, and it is expected that this proportion will continue to increase to 33% by 2023. From the perspective of panel makers, currently, flexible OLEDs are still dominated by Korean factories. Samsung Display will account for more than 50% of the entire global flexible OLED market in 2021. Although it will shrink due to the increase in production capacity from Chinese panel makers, it will also shrink in 2022. But it will still maintain a share of about 50% in 2022. Chinese panel manufacturers are particularly active in capacity expansion, especially BOE, TCL, and Visionox are all actively deploying flexible OLEDs. It is expected that the market share in 2022 will increase significantly compared to 2021.

Changes in the panel supply pattern have a huge impact on the global display industry, and will inevitably bring about changes in the industrial chain cooperation model. Under the current competitive landscape and environmental background, the global display industry should pay special attention to the industry chain.

The first is the upstream material supply chain. The shortage of upstream materials, especially semiconductor materials, has accelerated the restructuring of the upstream supply chain in the past year or so. Panel manufacturers pay more attention to the risk management of the supply chain. Chinese panel manufacturers will continue to expand and cooperate with local manufacturers. BOE is constantly introducing more local partners, and will continue to strengthen its thinking on display semiconductor materials in the future; TCL will also introduce more local supply chains to prevent supply chain risks and actively seek win-win cooperation with upstream manufacturers situation. From the downstream point of view, the diversified layout of the supply chain will become an obvious trend to prevent supply chain risks and achieve the purpose of supply chain balance.

In 2022, the overall demand for TV panels is not optimistic, but there are structural opportunities. The famous brand’s overall stocking strategy tends to be conservative, which affects the number of panel shipments to maintain a year-on-year downward trend. However, thanks to the accelerated promotion of large-scale size, the shipment area continues to increase. At the same time, from the perspective of subdivisions, although the performance of the 8K LCD market is mediocre, the shipment scale of OLED panels and high refresh rate panels will expand significantly, which is worth looking forward to. Especially in 2022, Samsung Electronics and other leading TV manufacturers will join the OLED camp, and Samsung Electronics will also carry out active and strategic cooperation with LGD in the WOLED field, which is expected to drive the global OLED TV and OLED TV panel shipments to continue to expand. According to statistics, the number of OLED TV panel shipments in 2021 will reach 7.6 million units, a year-on-year increase of 72.2%. It is estimated that the global OLED TV panel shipment scale will exceed 10 million units in 2022, with a year-on-year growth rate of 47.1%.

On the whole, in 2022, the plans of various panel factories will gradually become differentiated, the supply scale of panel factories in mainland China will continue to increase, and Taiwanese and Korean manufacturers have reduced the number of TV panels planned to vary degrees.

In 2022, the overall LCD TV supply and demand environment will be loose. In the first quarter, there will be excess supply in the off-season, and panel prices will continue to decline, but the decline will gradually narrow. In the second quarter, supply and demand will tend to balance, and panel prices are expected to stabilize.

The gradual increase in the production capacity of displayers, coupled with the growth of LCD panel manufacturers in monitor display supply planning, is expected to maintain a growth trend in the supply trend of display panels in 2022. Combined with the changes in the demand structure, the overall supply and demand situation in 2022 will be relatively loose. Therefore, it will lead to a continuous decline in the cost of displayer panels in at least the first half of 2022. Affected by the demand structure, the upgrade momentum of the monitor market will slow down, but there are still representative markets with growth potential, such as the Gaming monitor, which is driven by the dual engines of 240Hz and OLED, and the Gaming displayer market in 2022 can still maintain positive growth; Another example is Ultrawide displayer. Under the influence of the active strategy of suppliers, the joint force of the entire supply chain will promote the positive growth of the Ultrawide displayer market in 2022; the Curved surface LCD market will enter a state of slow growth, with the hope that the market can find new growth momentum.

With the growth of Notebook LCD production capacity, especially the mid-to-high-end production capacity, the supply shortage of Notebooks will be significantly eased in 2022. From the purchasing point of view, there is a certain risk of saturation in the notebook market in 2022. Therefore, in 2022, we should be alert to the risk of oversupply. In this process, there is still a positive side, such as the accelerated trend of large-scale LCD size and structural upgrading, etc. Accelerating this change will have a better impact on the market.

By sorting out the development potential of 5 core technologies such as Gaming, OLED, LTPS, Oxide, and Mini-LED in LCD panel applications for Notebook, we believe that on the whole, in 2022, the situation of the coexistence of multiple new notebook technologies and development and competition will become more obvious. In the process, the technologies with the greatest development potential in 2022 are Gaming, OLED, and LTPS; Oxide has slowed down in the past 2 years due to the influence of certain factors, but we believe that after 2023, Oxide will usher in new. The development of Mini-LED is limited in the future due to the high cost.

In 2021, under the panel supply pattern with the participation of BOE and Samsung Display, and more players, the competition in the smartphone panel market will show a hot trend, and the integration of the industry chain will also accelerate. In terms of technology types, the trend of the proportion of each technology type shows a differentiation phenomenon. Among them, the demand for flexible OLED continues to grow driven by the supply side. It is estimated that by 2025, the market share of flexible OLED smartphone panels will reach about 33%; In addition to the growth of flexible OLEDs, the penetration rates of a-Si（IPS）, LTPS, rigid OLEDs, etc. are all in a downward trend, forming a “hamburger” shape market.

In recent years, smartphone terminal brands have maintained high inventory levels. As of the end of 2021, there will still be a lot of inventory in some technology-specific panels, but the demand for flexible OLED panels for high-end brands in 2022 will still show a growing trend. The structure of the supply chain is shifting to mainland China. At the same time, flexible OLED panel factories in mainland China will also grow rapidly, and the customer structure will be further enriched.

The foldable smartphone has great growth potential in the next 3 years. Statistics show that the global shipments of folding display panels will be close to 13 million units in 2021, and it is expected to be close to 80 million units by 2025. The compound growth rate from 2019 to 2025 will reach About 88%, showing a trend of rapid growth. From the perspective of manufacturers, Samsung Display, a Korean manufacturer, will continue to dominate for a long time, and the global foldable display panel market share will stabilize at around 80%. More and more Chinese panel manufacturers are participating, such as BOE, TCL, Visionox, and other manufacturers, but based on the current capacity planning and overall technical strength of Chinese panel manufacturers, we believe that the scale of shipments is still relatively limited, and the proportion of Chinese panel manufacturers will be around 20%.

In terms of technology, the development trend of the in-vehicle displays toward large size and high resolution is also very clear. At the same time, in the future, there will be more and more car brands and models equipped with OLED. However, considering that it is more difficult to apply vehicle display technology, it is estimated that by 2025, the shipment of OLED vehicle displays will be about 3 million pcs. Mini-LED backlight products have been mass-produced in other applications, but currently, there are relatively few applications in the automotive field. There are already models released, and mass production is expected to be achieved in 2022. Mini-LED backlight is an upgrade of a-Si LCD, and each panel factory has a layout. Therefore, we expect that by 2025, the shipment of Mini-LED backlight vehicle display products will reach about 4 million pieces, with rapid growth.

In summary, the LCD applications and market in 2022 will see significant technological advances alongside the challenges. As an LCD supplier and manufacturer, VISLCD is optimistic about the future of LCD development and will maintain stable shipments and reasonable market prices, regardless of whether the market is hot or the demand is slow so that we can move forward together with our customers.

SEOUL, April 27 (Reuters) - LG Display Co Ltd (034220.KS) saw first-quarter profit plummet far below forecasts and warned of a further drop in panel prices as pandemic-driven demand for TVs, smartphones and laptops fades and competition heats up.

The South Korean Apple Inc (AAPL.O) supplier said it would shift its focus to higher-end products and gradually lower production of more commoditised LCD TV panels where it lacked a competitive advantage over cheaper Chinese rivals.

The LCD TV market shrank by more than 10% in the first quarter and Chinese competitors are pricing their products lower than LG Display"s expectations, Lee Tai-jong, head of the company"s large display marketing division, said on a call with analysts.

"Margins have been squeezed chiefly due to panel price declines and weaker demand, as consumers have already bought many screens during COVID-19 in the past two years," said Kim Yang-jae, an analyst at DAOL Investment & Securities.

Chinese rival BOE Technology Group Co Ltd (000725.SZ) has been tapped to also supply Apple with display screens, said a source with knowledge of the matter.

In the first quarter, prices of 55-inch liquid crystal display (LCD) panels for TV sets fell 16% from the previous quarter while prices of LCD panels for notebooks and monitors dropped by around 7% to 11%, according to data from TrendForce"s WitsView.

Apple is always looking to diversify its suppliers; this helps to improve existing technologies and make them less expensive. This time, TCL’s subsidiary CSOT wants to enter Apple’s LCD supply chain for upcoming Macs and iPads.

The publication says that CSOT is a “fierce competitor” to BOE in the global LCD market, but the company is ahead of CSOT in LCD panels for notebooks, tablets, and monitors as well as with the OLED technology for smartphones.

BOE, as you probably know, has for years been a third supplier of displays for Apple’s older LCD iPhones, but only started making OLED panels for Apple as of the iPhone 12. It was on track to pick up orders for 30-40M iPhones this year. It will also be responsible for around five million units of iPhone 14 OLED panels.

Not only that, but BOE is also supplying LCD panels to Apple for MacBooks and iPads. Analyst firm Omdia says the Chinese company will be the largest supplier of LCD panels for iPad this year.

CSOT also formed a team during the first half of the year to review building an OLED production line aimed at iPhones. CSOT’s expansion plan will, besides BOE, also threaten South Korean display maker LG Display, which leads the supply of LCD panels to Apple for high-end devices.

LG Display is expected to supply 14.8 million LCD panels to Apple for MacBooks this year, according to Omdia, making its share in this specific supply chain 55%. Having another competitor in the supply chain like CSOT could add pressure on LG Display to cut unit prices.

— On Dec 6, LGD stock closed 6.04% higher (at KRW21,950; 0.55x 2022 P/B) than its previous close, marking the third-largest increase of the year (+7.42% on Apr 5; +6.76% on Oct 28). The rally likely reflects Samsung Electronics’ decision to increase panel purchases from LGD.

— According to market research firm Omdia, SEC is expected to bolster its LCD TV panel purchases from LGD and Sharp in 2022 in its effort to lower reliance on Chinese panel manufacturers (currently at 70%) and strengthen its bargaining power against them. We believe about 10mn LCD TV panels (20% of annual SEC consumption) will be purchased. Shipments from LGD are expected to increase at least five-fold, raising total KRW value of orders into the trillions.

— In 2022, the OLED TV panel market is likely to suffer a supply shortage and become a sellers’ market; LGD currently has a near-monopoly on OLED TV panels. Samsung’s market foray next year should help expand the global OLED TV ecosystem, eventually allowing OLED TV panels to become the new standard, replacing LCD TV panels, which Chinese companies currently dominate. As a result, LGD’s bargaining power in OLED TV panels should solidify, boosting its large-size OLED panel business.

— We believe Apple is developing its metaverse hardware (XR headsets; release slated for 2H22) using parts from LGD and LG Innotek. In particular, Apple is likely to equip its XR headsets with OLEDoS panels (OLED on silicon, which has resolution four-to-five times higher than OLED panels on smartphones), in which case LGD stands to benefit. The resulting boost in business would allow LGD to begin recouping its OLED investments (business launched in 2013) and expedite change toward an OLED-oriented business structure. In 2022, we expect:

(3) the revenue proportion of LCD TV panels to plummet (24% in 2020→18% in 2021E→10% in 2022E), mitigating the impact of fluctuating LCD panel prices.

BOE (Chinese: 京东方, 000725:SZ), the world"s largest LCD panel maker by shipment, purchased 491 million of its A shares in a buyback scheme as of January 31, 2022, the company said in a statement.

The Beijing-based manufactuer of TV displays and mobile phone screens, which beat LG Display to emerge as the world"s top LCD panel producer in 2020, revealed that the shares it bought back through collective bidding accounted for 1.309% of its A-share total and 1.2771% of the company"s entire capital stock.

Market insiders have blamed BOE"s prolonged stock slump on a boom-to-bust cycle in the global LCD panel market. According to Display Supply Chain Consultants, a consultancy firm focusing on the display industry, the standard price of a 32 inch LCD TV panel was USD 38, down 64% from June 2021.