Strategizing display manufacturing post-pandemic has no historical context or roadmap that you can call on to provide some succor. Market prognostications suffer from a similar malaise. It may be that the best you can do is to take out the Covid-19 lockdown years, go back in time, and start from there.
I looked at one interesting set of data points, inspired by an Omdia report on large area displays, and extrapolated back and forth.
The problem with going back to 2019 is that you can make a guesstimate of what could have been a steady trajectory of growth, take out a period of activity between 2020 and 2022, and still find that we are not where we should expect to be and that no matter how much you decry inventory build-ups and supply chain issues, it doesn’t do any favors for projections of a return to normalcy in the second half of 2023.
In so far as the pandemic was anomalous with a surge in tech spending that boosted display sales to an extraordinary extent, while most people couldn’t even leave their homes, it’s probably likely that spending patterns will continue to tighten up even as we see data that shows markets opening up, and labor markets remain relatively strong. I would view the pandemic as being an influential impact on market dynamics from somewhere in the middle of 2019 until the middle of 2022, peaking around the first or second quarter of 2021. That would still require a recovery period that would take us from the middle of 2022 close to the end of 2024.
However, as we go through this recovery, we are facing forces of unpredictability that are creating downward pressure on economies, some of it directly aimed at the display industry. Putting aside the macroeconomic forces at play, and the war in Ukraine, the industry is facing a number of geopolitical pressures that seem to be getting worse. The catalyst for these geopolitical forces was the zero-tolerance pandemic policies of the Chinese government, which severely impact supply chains, although that was never the only reason, but it did give an opening for the US to reevaluate its position as a world superpower in technology. This, in turn, led to an aggressive backlash from the west, led by the US CHIPS Act, as it used a combination of sanctions and trade policies to force the manufacturing of technology products out of China.
The US has been heavy-handed in pursuit of its policies to raise its technology leadership role, coupled with a genuine antagonism towards China, which has left allies pursuing their own protectionism measures to avoid being caught in a new web of supply chain issues under US control. Hence, South Korea and Japan have put aside recent differences between them and are actively pursuing greater collaboration on strengthening their respective display industries. Not to mention the South Korean government’s investment in the country’s high-tech sector, with a staggering $47 billion allocated to display manufacturing.
Faced with all these heady world issues, if you’re strategizing for display manufacturing, you would be forgiven for grasping at the straws of reality to find the right projections. There is some indication that there is a domino effect of no-one-really-knows-anything planning tumbling through supply chains. At the consumer end, we haven’t really seen much to suggest that there has been any real feel for the numbers in the last 3 years. Every quarter has been a surprise, when things were up and now that things are down. That is, no doubt, being filtered through retailers, distributors, brand managers, and all the way through the factory. There is more than a 50/50 chance that the second half of 2023 is going to blindside everyone, and not in a good way.
Hollywood is cutting back as it adjusts for a post-pandemic battle for cord-cutters who are choosier and more parsimonious now that they are not locked down. Outside of IT spending, the computer market is back to looking like it is becoming a niche device market. Normally, the smartphone makers would be rejoicing, but don’t look to Apple to provide any leadership there, mired as the company is in yellow phones, and mystical headsets to please the ghost of Steve Jobs. And judging by the pricing for OLED TVs from the likes of Samsung and LG, we are entering an era of perpetual price marketing.
Before you go bury your head in your hands and think about finding a nice, stress-free hobby to get you through the next few years, it might be worth considering that given clarity, things are not going to get much better for a good couple of years and not a couple of months, you have a lot more certainty about your planning agenda. If your company’s executives are sitting on a lot of stock or stock awards, and get paid big quarterly bonuses, be prepared to keep laying people off, having lots of budget meetings, and using the word efficiency a lot. If you are working at a company that is a little more capable of thinking long term, you might want to consider that it is a time to brush up on your Art of War and start clawing away at the market share of your weakened competitors, or the ones who keep saying efficiency a lot. But, making plans based on the data from the last 3 years, and projecting out from there, downturn or no downturn? That’s a dumb game to play right now.
