According to the latest report on TV panel shipment by the WitsView research division of TrendForce, the end of the fiscal quarter in March and the near-resolution of TV panel material shortages have induced manufacturers to proactively step up their shipments, in turn raising TV panel shipment in March to 23.371 million pieces, a 16.4% increase MoM compared to February figures.
TV panel shipment amounted to 64.253 million pieces in 1Q20 despite QoQ and YoY decreases of 12.0% and 8.2%, respectively. 1Q20 shipment exceeded market expectations, as it fell short of the shipment target set by manufacturers at the start of 2020 by only 4.9%, signaling an end of COVID-19’s impact on panel suppliers. In 2Q20, factors influencing the TV panel industry will shift towards the demand side in the TV market.
Europe, the U.S., and several emerging Asian markets have announced citywide and nationwide quarantines and lockdowns. In addition, TrendForce indicates that a pessimistic outlook on the overall global economy is expected to cause declining sales in the consumer electronics market. As such, in spite of the seeming QoQ growth in 2Q20 TV panel shipment compared to a relatively weak 1Q20 base period, the magnitude of this growth is projected to reach a mere 2.3% due to panel purchasers’ increasingly conservative procurement efforts. In total, 2Q20 TV panel shipment is estimated at 65.75 million pieces, a 7.1% decrease YoY, reflecting a shortfall in panel demand.
As TV demand tumbles, panel suppliers and purchasers alike have begun to generate rumors of lowered panel manufacturer capacity utilization rates. TrendForce nonetheless holds the opinion that lowering capacity utilization is not the best course of action at the present, for three reasons: First, quotes for most sizes of TV panels are currently higher than cash costs, following a general uptrend in quotes since the start of the year. Lowering capacity utilization at the moment thus goes against the principle of profit maximization. Second, the rising demand for telework arrangements has galvanized a corresponding short-term hike in IT panel demand. Therefore, some panel manufacturers may still maintain their level of capacity utilization through adjusting their product mix to meet this demand. Third, Korean panel manufacturers have announced plans to shut down their LCD production lines in 4Q20. This shutdown is expected to result in a reshuffle in both the supply chain and the market shares of panel manufacturers.
As major panel suppliers in China are aiming to expand their market shares, they will be unlikely to lower their capacity utilization rates. Likewise, Taiwanese panel suppliers will not be undertaking any drastic actions, given their efforts to maintain their existing market shares. In general, TrendForce does not foresee a high probability for panel manufacturers to reduce capacity utilization on a large scale. Even so, Korean manufacturers have exhibited a shift in business ethos from an aggressive approach to a conservative one, following their announcement to reduce LCD production. In the face of falling TV panel prices, Korean suppliers may move forward their plans to lower glass input, originally scheduled for 2H20, to 2Q20. While this move may serve as a measure to lessen the drop in panel prices, it will also position Korean manufacturers as the most significant variable in the 2Q20 supply of TV panels.
