What They Say
DSCC published a blog post that set out the results from its financial health report on the display supply chain (registration required). Despite the recent comments about dramatically declining LCD prices, Q1 was still a profitable quarter overall for panel makers. Looking at the 13 publicly traded panel makers, total revenues decreased by 14% Q/Q and were flat Y/Y at $34.0 billion, falling from their all-time high of $39.4 billion in Q4.
BOE held the top position in revenue share with revenues of $7.7 billion for 23% of industry revenues. Samsung revenues decreased by 14% Q/Q and SDC’s share held steady at nearly 20% while LGD’s share decreased to 16% as its revenues declined 28% Q/Q. Other companies are in single digit shares.
Margins are shown in a chart which highlights the shape of the crystal cycle, with peaks in Q1 2017 and Q2 2021 and with a sharp drop over the last year.
An unusual chart is the one below that details the level of inventory held by panel makers. The value of inventories have pretty well doubled in the last couple of years.
What We Think
The saying is that “Those that live by the sword, die by the sword”. DSCC’s blog highlighted that those that did best in the last cycle (i.e. those with big large area LCD businesses) are also those that have declined fastest in the last year.
The inventory value chart is disconcerting. As someone that was used to the PC business, where inventory was always a potential liability because costs always seemed to be coming down, I always remember my shock on hearing a TV firm executive say, in the early days of LCD TV, that “Inventory is a great asset in the TV business”. Of course, the arrival of FPD TVs changed that point of view. Still, he had a point that if you didn’t have inventory for the peak season, you could miss a lot of sales. Still, such a huge growth in panel inventory can’t be healthy. (BR)
Panel Maker Inventory Value, Q3’to Q3’21
