IHS has forecast that the utilisation rate of LCD panel fabs will rise by 3.2 percentage points in Q3’16, topping out at 90.2%. This would mark the first time since Q1’15 that utilisation has exceeded 90%.
Rising TV panel demand is the most significant factor impacting the utilisation rate increase. TV panels represent about 80% of large-area panel demand. The increasing size of TV panels is also having an affect. TV panel demand area in Q3’16 is expected to rise 9.4% QoQ.
Between July and September, TV set makers plan to increase their production volume, and related panel purchases, to supply various channels in time for the end-of-year sales period.
Another factor affecting fab utilisation is the healthy global display inventory level. At the end of Q2’16, panel inventory level was tight (3.1 weeks). Tight inventory means that a rise in LCD panel area demand directly leads to rising panel production. Year-end market uncertainties still exist, which could affect panel makers’ sales plans. However, the current healthy inventory level reduces the impact of excessive inventory caused by sales setbacks.
IHS says that falling panel yield rates is also having an affect on utilisation rates. In the second half of the year, TV set makers plan to ‘significantly’ expand the supply of new products. Some manufacturers are also expected to aggressively introduce new technologies this year, with features such as higher resolutions and curved screens. This trend will lead to a drop in yield rates and a consequent rise in utilisation.
Finally, IHS expects the tight capacity, coupled with an increase in LCD panel demand, to lead to rising panel prices in Q3, which will continue into Q4.
