Demand for Large Flat Panel Displays to Increase in 2019, IHS Markit Says

MW
Mike Wheatley

IHS Markit is predicting that prices of large flat panel displays (FPDs) used in TVs may increase towards the end of this year, following a long period of decline that came about due to oversupply issues.

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The forecast comes via IHS Markit’s AMOLED and LCD Supply Demand & Equipment Intelligence Service report, and was first reported by RapidTV News.

The report notes that manufacturers of large FPDs, which are defined as screens larger than 9-inches in size, have been ramping up their production capacity at a faster rate than demand for more than a year.

“This [production capacity] growth mainly comes from new Gen 8.6 and Gen 10.5/11 factories in China, in addition to productivity improvements at legacy factories,” IHS Markit said.

The oversupply of panels led to a steady decrease in prices since the second half of 2017, as many remain unsold. For example, FPD prices fell by 2.7 percent in the fourth quarter of 2018, and are likely to decline by another 5.4 percent in the current quarter, the analyst firm said.

However, with panel makers now seeing decreased profitability, many are likely to begin pulling back in order to stimulate more demand for their products, IHS Markit said. In addition, some manufacturers are expected to either shut down existing legacy LCD production facilities, or convert these to making OLED screens instead. Some panel makers may also postpone planned investments in new production facilities, it said.

We’ve already seen this happen, with LG Display announcing late last year that it would suspend construction of its planned 10.5G display manufacturing facility, also known as "P10", in Paju, South Korea, due to a stagnating market for LCD displays. Instead, the Korean firm said it would divert resources towards a second 8.5G production plant being built in China’s Guangzhou, which will be used to manufacture OLED panels.

“With so much new capacity currently being built out, substantial amounts of uncompetitive legacy production capacity are expected to be taken offline, as the industry works to balance supply and demand,” said IHS Markit senior director Charles Annis.

IHS Markit says these moves should ensure a more “balanced” supply of large FPD panels on the market, leading to a slight uptick in pricing and more profitability for manufacturers. TV makers are already aware of this, it adds, and some have consequently began to increase panel procurement and negotiate new prices for some sizes.

“As excess capacity is shuttered and demand increases, supply and demand will self-correct over time,” Annis said.

Overall, IHS Markit says demand for large FPD panels will increase by about 10 percent this year, compared to 2018.