As demand softens, a new challenge emerges, and Chinese panel manufacturers unveil a downtime strategy to navigate the supply landscape in 2024.
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In business news, the global landscape of large-area LCD (Liquid Crystal Display) and OLED (organic light-emitting diode) displays witnessed a significant transformation throughout 2023. The supply-to-demand glut ratio, which stood at an unwieldy 26.7% in the first quarter of the year, descended to a more sustainable 13.7% by the third quarter. This welcome shift was underpinned by a robust 19.6% surge in area demand, while capacity growth limped at just 1.6% during the initial three-quarters of 2023. Consequently, this dynamic fueled a notable 31% uptick in weighted LCD TV panel prices and ushered in increased profitability for many panel manufacturers. Yet, according to the latest insights from Omdia’s OLED and LCD Supply Demand and Equipment Tracker, demand is currently showing signs of softening, with predictions of the glut ratio tilting back towards oversupply from the fourth quarter of 2023 into the first half of 2024.
The research mentions that after rebounding from supply constraints during the pandemic’s peak, ample factory capacity has persistently been available to satisfy flat panel display (FPD) demand. Throughout most of the year, panel manufacturers effectively leveraged growing demand by adopting make-to-order production strategies and controlling glass input, which pushed prices higher. The careful management of production alongside burgeoning demand bolstered the monthly utilisation rate at large glass fabs from 60.3% in January to a zenith of 85.3% in July. Nevertheless, with relatively elevated prices and sluggish end-market demand, TV manufacturers have grown hesitant to procure and stock panels. Panel manufacturers, sensing this shift, are once again curbing glass input to regain pricing leverage.
Downtime Strategy to Navigate Supply Challenges
Consequently, the utilisation rate for Gen 7 to Gen 10.5 fabs is expected to dwindle to an average of 75% in the final quarter of 2023. In addition, prominent Chinese panel manufacturers are contemplating extending their Lunar New Year holidays, which would entail an extra week of production downtime in February. This proactive measure is aimed at mitigating the anticipated seasonal dip in demand during the first quarter of 2024 and positioning panel makers favourably for a potential rebound in demand during the second and third quarters of the same year.
The effectiveness of these strategies remains to be determined within the current market climate. TV manufacturers are grappling with profitability challenges and are seeking to drive down prices before resuming substantial panel purchases. Panel makers and set makers will remain locked in a battle of glass input restrictions versus panel purchase controls as both try to ride out the oversupply and until a sustained demand recovery takes hold next year, hopefully raising the fortunes of both.” The dynamics of the large-area LCD and OLED market will undoubtedly continue to unfold in the coming months, shaping the fortunes of key players in this ever-evolving industry.
