According to Omdia's latest display production and inventory tracking report, global display panel manufacturers are expected to significantly reduce the utilization rate of their panel factories in October 2024. The utilization rate of the overall panel factory is expected to decline by 14 percentage points quarter-on-quarter to 68%.
This forecast reflects the current pressure on the panel industry, mainly due to the re-decline in panel prices and the readjustment of supply and demand. It is reported that in order to cope with the pressure of overcapacity and falling prices, some panel companies have planned to take a two-week holiday for their LCD TV panel production factories before and after the National Day. In addition, panel factories in Taiwan, Japan, and Korea also plan to adjust production according to market demand.
Although panel company practitioners believe that adjusting production according to demand is the norm and will not cause excessive concern, the pressure on established panel manufacturers such as Japan and South Korea may be greater. For example, Sharp has announced the discontinuation of the 10th generation LCD panel line in Japan, while LGD has also revealed that TCL Huaxing has become the preferred bidder for its Guangzhou 8.5 generation LCD panel line.
With the further withdrawal of Japanese and Korean companies in the field of LCD TV panels, it is expected that by 2025, the share of Chinese mainland manufacturers in the global LCD panel supply will reach 72.7%. At the same time, the cyclical changes in supply and demand in the panel industry are also very obvious, and the global LCD TV panel supply was loose in the third quarter, and prices have begun to fall since July, and this trend is expected to continue until September.
Figure: The global display panel market will face challenges in 2024(Source:CnBeta)
During the production control period, the total average monthly utilization rate of China's three largest panel manufacturers, BOE, CSOT and Huike Display, is expected to fall to 61% in October 2024. Due to their large market share, the fab utilization control of these companies has a significant impact on the overall LCD TV panel market. In the first half of 2024, these three panel manufacturers will have a total area share of more than 60% of the LCD TV panel market. At the same time, the average monthly utilization rate of other panel manufacturers has remained relatively stable, ranging from 75% to 82% in 2024. Major panel makers in China are planning to adjust production in response to the decline in LCD TV panel prices, which are expected to fall monthly by the middle of the fourth quarter. These panel makers expect that production controls will halt or mitigate price declines.
Alex Kang, Principal Analyst for Omdia's Display Research business, said: "Panel manufacturers were able to increase panel prices after reducing utilization to 56% in February 2024 and continue to follow an order-to-order strategy of producing panels only upon receipt of confirmed customer orders. Even after the decline in factory utilization in October, when panel prices are about to fall or inventories are about to rise, panel manufacturers are highly likely to implement significant production controls.
Despite the challenges, the future of the panel industry is still worth looking forward to. With the advancement of technology and the diversification of application scenarios, new display technologies such as OLED and Mini-LED may become new hot spots in the market, bringing new development opportunities to the industry. At the same time, the application of artificial intelligence technology may also bring innovation to the panel manufacturing process, improving production efficiency and yield. Panel manufacturers need to grasp these changes and strengthen cooperation with the upstream and downstream of the industry to increase the added value of their products and resist market pressure.
