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LCD inventory adjustments to drag display shipments in Q1

Posted: 04 Mar 2016 ?? ?Print Version ?Bookmark and Share

Keywords:IHS? LCD? inventory? TV panel? OLED?

IHS Inc. has released a report indicating that liquid crystal display (LCD) manufacturer inventory adjustments and continued slowing demand are causing TV and information technology (IT) display prices to fall, further eroding panel makers' profitability. TV and IT display shipments in 1Q16 are forecast to drop eight per cent compared to the same period last year, to register just 196 million units. This is the first time since 2009 that panel shipments have declined in Q1 YoY, stated the market research firm.

Although unit shipments of LCD also declined last year, shipment area increased thanks to the growing popularity of large-screen TV sets, which sustained the display industry. Large-area TFT LCD shipment area increased by five per cent in 2015 YoY, while unit shipments declined four per cent, reaching 694 million units, according to the IHS Large Area Display Market Tracker. "Due to global currency exchange issues and slower demand from emerging markets, global TV display demand in 2015 was lower than initially forecast," said Yoonsung Chung, director of large area display research for IHS Technology.

"TV panel demand in early of 2016 will continue to falter, because of excess panel inventory carried over from last year," said Linda Lin, senior analyst, large displays, IHS Technology. "To control the deficits caused by overproduction of IT and TV panels, panel makers will have to reduce fab utilisation early this year, since average selling prices are nearing manufacturing costs."

Notebook PC panel shipments are expected to experience the most serious YoY decline, falling 14 per cent to reach 40.9 million units in Q1. OLED TV panels will be the only display segment forecast to experience growth in Q1.

TV and IT LCD panel shipment forecast

Figure 1: TV and IT display shipments in 1Q16 are forecast to drop eight per cent compared to the same period last year, to register just 196 million units, revealed IHS.

The oversupply in LCD TV panels is forecast to continue into the first quarter, according to the latest IHS TV Display Supply Chain Tracker - China. The leading six TV manufacturers in China expect to lower their panel purchasing by 37 per cent QoQ and 15 per cent YoY. Meanwhile, Samsung Electronics and LG Electronics will slightly reduce panel purchases in Q1.

"Leading display manufacturers have not dramatically reduced fab utilisation in Q4 of last year, but the situation will change in 1Q16, as they will be pressed to reduce the loading," Lin said. "The Chinese New Year holiday, planned fab maintenance and repairs, and the transition to thinner glass will also reduce output. BOE, ChinaStar, CEC-Panda and other leading Chinese manufacturers that are ramping up new Gen8 fabs will have to reduce their capacity utilisation in Q1 to fight declining panel prices and shipments."

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