The increase in the average size of TVs has driven a substantial increase in the area of panel shipments.
In the first half of 2021, the price increase of the LCD panel industry continued. As early as the first quarter, the mainstream TV panel size increased by more than 50%, and some sizes even doubled. The momentum remained unchanged in the second quarter. Right now, the panel market presents a complicated supply-demand relationship. The influencing factors include the decline in demand for low-end electronic equipment after the epidemic has eased, the increase in hardware costs, and the shortage of components. The trend of panel prices in the second half of the year has also become the focus of attention.
"We believe that a substantial price decline is difficult to see in the second half of this year at the current time." Li Yaqin, general manager of Sigmaintell, analyzed to a reporter from 21st Century Business Herald. On the one hand, after the epidemic eased, Europe and the United States The national stimulus fiscal policy will not weaken. For example, encouraging investment and encouraging enterprises to expand production will be accompanied by rising wages and purchasing power, and demand will gradually and slowly return to normal levels from the explosive growth caused by the current epidemic; on the other hand, with As mobile office becomes the norm, there will be strong demand for mobile products such as notebooks and PCs. For example, notebooks have been out of stock since 2020.
In her view: "2020 is the peak of demand, especially for PC products and TV products. In terms of PC categories, consumer surveys have found that three to five years are the replacement cycle, especially in the education and commercial markets. It is a product with strong demand. In the long run, the demand for the entire display panel is gradually returning, and the overall display panel price shows a relatively natural fall, rather than a substantial fall."
The price correction in the fourth quarter drives IC supply still tight
TV is the main application of LCD panels. Many people in the industry believe that LCD TV panels will remain at a high price in the third quarter, gradually stabilizing, and there will also be structural increases.
Zhang Hong, research director of the TV division of Qunzhi Consulting, told the reporter of 21st Century Business Herald: "In the third quarter, because the global, especially the top brands stocked panels for'Black Friday', the demand for panel stocking by international brands remained strong. Based on this, In the third quarter, the global LCD (liquid crystal) TV panel market supply and demand are judged to gradually balance, which will also drive the panel price to show a gradual stabilization trend in the third quarter. In the fourth quarter, manufacturers gradually completed the peak season panel stocking, and the stocking demand will gradually weaken. Due to the gradual recovery of supply capacity from the supply side, the impact of two factors is expected to increase the risk of oversupply in the overall LCD TV panel market in the fourth quarter, and panel prices will usher in a downward trend in the fourth quarter."
Specifically, from the demand side, after the epidemic eased, some demand has indeed declined in the second quarter, and TV market sales are also falling. "The overall TV shipment scale in the Chinese market has fallen below 50 million units in 2020 to 46.9 million units, a year-on-year decrease of 10.1%. This year, it is expected that the shipment volume will still maintain a year-on-year decline of nearly 10%. Due to rigid demand and consumption Due to the weakening of the intensity, it will be difficult for the annual TV shipments in the Chinese market to return to more than 50 million units in a relatively long period of time in the future." Zhang Hong said.
However, it is worth noting that despite the poor sales of TVs, the average size has grown rapidly, which has driven a substantial increase in the area of panel shipments. According to the statistics of Qunzhi Consulting, the average size of China’s TV market will grow by 3.4 inches in 2021. The driving force for the substantial growth is 65 inches and above, including 70 inches, 75 inches, and 80 inches and above. The proportion of products above 80 inches has shown a significant increase, 65 inches Compared with 2020, the proportion of products increased by nearly ten percentage points to 22.8%, which is a very significant increase. It is expected to maintain a significant growth trend in 2022, which will also drive the average TV size of the Chinese market to increase by more than 1 inch, which will bring new value to the panel industry.
From the perspective of the panel supply side, Zhang Hong said that the current global investment in new lines of high-generation LCD panels has slowed down, but panel manufacturers, especially head panel manufacturers, are very active in expanding the capacity of existing production lines, especially performance In Huike's capacity expansion for the 8.6 generation line, BOE and China Star Optoelectronics for the 10.5 generation line capacity expansion, driven by active capacity expansion, according to the simulation data of Qunzhi Consulting, it can be seen that the actual supply area of global LCD TV panels maintains a significant increase In 2021, the global LCD TV panel capacity supply area will increase by 8.6% year-on-year, and it is expected that the supply capacity area in 2022 will increase by 12.1% year-on-year. The overall production capacity growth rate will still maintain a relatively high growth trend.
In addition, insufficient upstream chip production capacity is also affecting the supply of panels. Li Yaqin told reporters: "The supply of driver ICs is still tight. In the first half of the year, IT and TV were affected to varying degrees. The impact of the display market was close to about 7%, and TV also had 4 % To 5%. The 8-inch part of LCD shares production capacity with many components, such as power management chips, automotive power management chips, etc. Therefore, the tightness of 8-inch chips will not be systematically relieved this year or even next year. Looking at the 12-inch relatively mature process and starting to make LCD driver ICs, we believe that the release of 12-inch production capacity is an important observation for LCD driver ICs."
LCD panel cyclical weakening panel manufacturers continue to make profits
Behind the price fluctuations of LCD panels, the pattern and logic of the industry are changing.
On the one hand, the overall panel display industry is in a long-term growth. BOE President Liu Xiaodong pointed out at the 2021 World Display Conference that from 2015 to 2020, the global display industry is in a period of steady growth, with a compound annual growth rate of 2% in shipments. . It is estimated that starting from 2021, the global display industry will enter the next period of rapid growth, with a compound annual growth rate of shipments of 7%, of which the growth of innovative applications contributes 76%.
On the other hand, in the liquid crystal field, the head effect of panel manufacturers is becoming more and more obvious, and the panel production area continues to gather in the head panel manufacturers. Zhang Hong introduced that in 2021, in terms of the proportion of global LCD TV panel production area, the production area of BOE, China Star Optoelectronics, and Huike will account for more than 50% of the production area. By 2023, the top three panel manufacturers will be in LCD TV panel. The proportion of the production area will be close to 70%, of which BOE will gradually close to 30%. The global LCD TV panel market manufacturers' production capacity will continue to increase, and the competition pattern of “one super, many strong” will gradually be formed.
According to data from Qunzhi Consulting, in terms of LCD panel production capacity this year, based on the 5th to 10.5th generation, BOE ranked first, with an estimated production capacity of 27%; the second is China Star Optoelectronics, accounting for 14.1%; the third is LG, reaching 11.4%; fourth and fifth are Innolux and AUO, the world's top five head panel manufacturers together account for 73.3%.
As the industry structure becomes more stable and the growth of LCD production capacity slows down, the LCD industry may enter a new growth stage. According to the report of Galaxy Securities, the compound growth rate of LCD production capacity in the next three years will be 3.1%; the compound growth rate of LCD demand side will be about 6.5%. The industry supply and demand pattern will improve, cyclicality will be weakened, and panel prices will remain within a reasonable range. , The profitability of LCD panel manufacturers will be greatly improved.
In the cold winter of overcapacity in the past few years, and now in the boom cycle of price increases, panel makers have achieved substantial growth in their profits this year. Next, will such growth be sustainable?
Zhang Hong said: "Combined with the gradual weakening of demand, there will be no significant decline. At the same time, based on the strong competition pattern of the panel market and the trend of further increase in production capacity, we believe that LCD panel manufacturers will maintain for a long time. Better profitability status."
Although TV sales continue to decline, the sales area is growing and the technology is iterating to make up for the new demand. At the same time, the flat panel and display fields in the PC market, as well as the automotive market, continue to grow; in addition, panel manufacturers themselves are also adjusting Strategies, how to increase the added value of products, and diversify the income structure are all important issues.
Li Yaqin also told reporters: “After a wave of price competition in 2018 and 2019, panel manufacturers have been very active in making adjustments. The biggest adjustment is to seize the strong demand for IT from the epidemic to significantly reduce the 8.5 generation line, including 8.6. The main TV panel makers’ 8.5 and 8.6 generations of TV’s production capacity have been reduced by at least 40% to 50%. Now panel makers have a strong sense of crisis for the future, and fierce price competition in 2018 and 2019 hurts The profit of the entire industry chain was not obtained. At that time, the whole machine brand did not get more profit in it. Now the panel makers are constantly thinking about making more adjustments, such as further reducing some TVs in the existing ones, and allocating limited IC resources. It’s possible to allocate the market to as many other applications as possible. As the concentration of manufacturers increases, panel manufacturers should think more rationally and create more value for the future industry."
--From 21st Century Business Herald.
Add: Building A, Bailu Plaza, No. 48, Gonghe Industrial Road, Gongle Community, Xixiang Street, Baoan District, Shenzhen,China. 518126