Since the second half of this year, as market demand has reduced and the shortage of upstream components has eased year by year, panel manufacturers have increased their production capacity, and the LCD panel supply and demand pattern has begun to reverse. The market has turned from prosperity to decline, and product prices have fallen sharply. After the biggest drop in a single month, LCD panel prices in October were still falling sharply.
As Korean manufacturers postpone their exit from the LCD market, and the release of domestic manufacturers to expand production capacity, industry insiders predict that panel prices will continue to fall into the second quarter of next year. However, one of the variables is whether the shortage of raw materials caused by power curtailment affects the production of panel manufacturers or affects the trend of price changes.
Since 2020, the epidemic has pushed the expansion of home demand. The demand for LCD panels used in the fields of tablets, laptops, TVs, etc. has surged, and the shortage of upstream parts has affected the supply, resulting in the continuous increase of LCD panel prices, from May last year to June this year. In December, the industry also ushered in the longest price increase cycle in the past 10 years.
However, as the supply of upstream raw materials gradually eased, panel manufacturers continued to increase their production capacity, coupled with the rapid decline in terminal market demand, resulting in a reversal of the supply and demand pattern of LCD panels, and LCD TV panel prices began to fall in July.
Dong-Min, deputy secretary-general of the China Electronic Video Industry Association, told Jiwei.com, “With the increase in overall supply and the improvement of production efficiency, panel prices will generally decline in a spiral manner.”
According to WitsView’s latest quotations, the quotations of TV panels of various sizes have fallen across the board. Among them, the 32- and 43-inch small and medium-sized TV panels, which were the first to fall in price since July, returned to US$44 and US$78 in October, and fell 21% and 23% month-on-month in October. The mid-year high of the 32-inch panel was at US$88. In just a few months, the quotation dropped by 50%.
Medium and large-size TV panels also weakened. Among them, the 55-inch panel fell the most, with a sharp drop of 40 US dollars in a single month, or 21.6%; the 65-inch TV panel fell by 30 US dollars or 12%. The price of 55-inch and 65-inch at the end of October came to US$145 and US$220 respectively.
CINNO confessed to Jiwei that recent LCD panel prices, especially large-size LCD prices, have maintained a rapid decline, mainly due to the previous high panel prices and international shipping prices, and some overseas stocking demand shifted to the first half of the year, leading to the second half of the year. Overseas demand continues to be sluggish, and overall there is an oversupply situation.
Faced with the rapid decline in panel quotations, AUO Chairman Peng Shuanglang said frankly that in previous years, panel makers’ shipments in October could catch up with the peak shopping season in Europe and the United States. This year, due to the shortage of materials and containers, the delivery time of freight has been extended, and the demand for consumer products Weakness has led to the early end of the peak season, the price of consumer TV panels has dropped significantly, and brand customers have also revised their orders.
With the reversal of market supply and demand, TV manufacturers on the demand side have also shown a tough attitude towards panel manufacturers. A terminal brand person said, “This kind of high price is unacceptable. If the price is not reduced, the purchase amount will be halved.” As LCD panel prices continue to fall, it also affects the operating performance of related manufacturers in the panel industry chain.
According to statistics, although the net profit of BOE and TCL Technology’s two major panel manufacturers in Q3 still maintained a rapid growth trend, compared with the growth rate in the first half of the year, there has been a sharp decline. For example, BOE’s net profit attributable to the parent company dropped from 1023.96% in the first half of the year to 430% in Q3, while TCL Technology also dropped from 461.55% to 175%.
BOE pointed out that entering the third quarter, due to congestion in shipping and rising logistics costs, which affected the willingness of downstream customers to stock up, the prices of TV products have undergone structural adjustments.
And TCL also said that in the large-size business area, due to the disturbance of logistics and demand in some parts of the world, the prices of main products were adjusted at a high level in the third quarter. Coupled with the impact of fluctuations in the upstream supply chain, the quarterly profit of the large-size business fell quarter-on-quarter.
In addition to panel manufacturers, manufacturers such as modules, polarizers, reflective films, and terminal brands have also experienced different degrees of decline. In particular, the increase in the net profit attributable to the parent of the polarizer manufacturer Shenzhen Textile has increased from 10543.24% in the first half of the year to -91.91% in Q3, a very large decline.
On the whole, with the decline in panel quotations, the operating performance of panel manufacturers and industry chain companies has also been greatly affected. Compared with the first half of the year, most manufacturers’ Q3 net profit attributable to their parent companies has narrowed or declined.
The inventory of terminal manufacturers is high, and the decline may continue until Q2 next year
At present, the supply-demand ratio of LCD panels is still expanding. Fan Boyu, Deputy General Manager of Research at TrendForce’s Display Research Office, pointed out that the Korean factory’s delayed exit from the TFT-LCD market, coupled with the launch of a new round of expansion plans by a number of panel makers, has allowed market supply and demand to gradually develop in a looser direction. Large size is expected The panel supply-demand ratio will rise from 5.4% this year to 7.3% next year.
It is foreseeable that panel prices will show a weak trend for a period of time, and whether they can create a rebound opportunity will test how many panel makers adjust between utilization rate, product mix, and profitability.
“Recently, LCD panels are in a state of sharp decline, especially in September, which set the largest monthly decline in history. It is expected that the decline in panel prices will be narrowed by November, but the decline in panel prices or the state of stable non-increasing should be expected. It will last for a period of time. For now, it will last until the second quarter of next year.” Dong Min told Jiwei.com, but one of the variables is the shortage of raw materials caused by power curtailment and how much impact it has on panel supply.
According to data from Ovi Revo, power curtailment measures in some regions of China have caused the capacity utilization rate of LCD panel supply chain manufacturers’ factories to drop to about 60%, while the output of panel components and LCD modules has dropped by about 30%. However, it also said that China’s panel makers have not been affected by power supply restrictions so far, but manufacturers are reducing output to cope with the continued decline in panel prices.
CINNO analysts also expressed similar views. In order to cope with the decline in panel prices, panel makers have begun to lower their utilization rate. In addition, the impact of power curtailment on the upstream and downstream of panel factories has begun to appear, and it has become difficult to maintain high utilization.
Although panel makers have begun to adjust their utilization rate to ease the pressure caused by oversupply and high inventories, the high level of terminal brand inventory still affects market demand. Dong Min said, “In July of this year, the inventory of terminal manufacturers was very high, and some top brands almost reached a record high. As it was predicted that panel prices would fall, the top brands also cleared their inventory. But the National Day and Double 11 Stocking up, resulting in the current inventory is still at a relatively high level.”
Regarding the exit schedule of Korean manufacturers and its impact on the LCD panel market. Dong Min said, “Samsung Display has withdrawn a lot of production capacity, and only one 8.5-generation line is left in production, while LGD has not withdrawn so far. The impact of the change in the business strategy of Korean manufacturers on the entire market is not just a reduction in supply. , But affect the overall market sentiment changes, it will magnify the difference between supply and demand.”
Faced with the decline in LCD panel prices, BOE said that it still maintains its judgment on the weakening of the panel cycle. The current decline in TV market prices has in fact been a factor in the correction of the excessively rapid price increase in the previous period. The company does not want industry prices to rise or fall too quickly, but rather to maintain relative stability.
TCL founder and chairman Li Dongsheng also stated at the performance exchange meeting that the cyclical fluctuations in the panel industry will be significantly weakened in the future.
Regarding changes in the industry cycle, Dong Min said, “The panel industry is currently coming out of the off-peak season cycle, but it is actually difficult to get out of the cycle in an all-round way. With the recovery of terminal market demand, panel prices may stabilize and rise after the second quarter of next year .”