The gist of it: foundation panel costs have edged up but the industry is in the midst of the worst downturn since 2008. Lower demand is driving higher prices for panels, but it is not clear how competition among manufacturers, the general economic climate, political ramifications, and end user demand will impact the trajectory of the industry. This is independent of where panels are ending up, TVs, IT products, or the like. Could pricing pressures mostly be a function of manufacturers positioning themselves in the market, as opposed to the dynamics of supply and demand? If it is, and the slack remains in the market, there has to be some fragmenting among suppliers, and that should create a downward force on prices.
Monitor and Notebook Panel Pricing Trends
Sigmaintell is seeing an uptick in prices for monitor panels, primarily driven by an increase in TV panel orders, which has led to rising utilization. The price surge is prominently noted in open cell (OC) panels. However, the prices for liquid crystal module (LCM) panels have remained stable, although a price increase is anticipated in June.
The price for a 21.5″ full HD (FHD), vertical alignment (VA) OC panel went up by $0.2 in May, while the LCM price was stable but projected to see an increment of $0.2 in June. In the case of a 23.8″ FHD, VA OC panel, its price rose by $0.3 in May and is estimated to reach $0.5 in June. The in-plane switching (IPS) OC’s lowest price is also expected to increase, leading to an uptick in the average selling price (ASP) by $0.1 in May and eventually reaching $0.3 in June. For 27″ FHD panels, the LCM prices remained constant while the OC price saw a gradual increase. The price of VA Gaming panels rose significantly in May with an estimated ASP increase of $0.8, while the non-gaming panel price grew by $0.5 in May and is expected to escalate further in June.
On the front of notebook panels, due to subdued market performance in China and globally in Q1’23, leading notebook brands hold high channel inventory. As a result, these brands persist with their conservative purchasing strategy and stringent inventory control. On the supply side, the production capacity for notebooks remains low. Despite the introduction of new production capacity, the strategy to increase volume to reduce price has been ineffective due to low demand. Consequently, the supply-demand balance in the notebook panel market appears healthy.
Turning to specific pricing trends for various types of notebook panels, the prices for low-end HD Twisted Nematic (TN) panels of 11.6″, 14″, and 15.6″ remained steady in May and June. Similarly, the prices for IPS Full HD (FHD) and FHD+ products with both 16:9 and 16:10 aspect ratios have stabilized. On the higher end, the decline in prices for mainstream high-frequency products ceased in May, and the decrease in prices for high-end specifications also decelerated.
Flat Panel Display’s Q1’23 Financials
DSCC is reporting that in Q1’23, Samsung Display stood out in the flat panel display (FPD) industry, surpassing other companies, especially those focusing on LCD technology, based on a financial assessment. These companies faced their third consecutive quarter of significant losses, while even OLED-focused companies struggled to be profitable. Samsung Display, however, maintained strong profits despite a seasonal slowdown. Overall, FPD makers’ revenues dropped by 19% QoQ and 33% YoY to $21.6 billion, a 43% decline from the record high of $38.2 billion in Q4’21.
The Crystal Cycle, which represents the industry’s cyclical ups and downs, had a notable impact on margins. The industry experienced a surge in LCD panel prices due to the pandemic, followed by a decrease starting from Q3’21. In Q1’23, all ten companies reporting results suffered net losses, resulting in an industry-wide loss of $2.2 billion, marking the fourth consecutive quarter of losses.
BOE and CSOT, two Chinese giants, significantly increased their inventory levels in Q1’23, contributing to the industry’s slight inventory increase. While panel makers managed to reduce their debts during the profitable period of the pandemic, recent net losses have led to increasing debt-to-equity ratios for the past three quarters.
The industry is currently facing its most severe downturn since 2008-2009, with demand decreasing even for OLED-focused companies. In contrast, Samsung Display remains profitable in the OLED display panel segment. Although LCD panel prices are showing solid increases in Q2’23, achieving profitability remains a distant goal for most LCD manufacturers.
