Chinese panel makers, with 67.5% of LCD TV display shipments in 2023, plan to reduce their fab utilisation in response to market conditions.
Overall utilisation of display fabs is expected to drop below 68% in Q1 2024. This reduction is partly due to early-year demand slowdown and strategic moves by panel makers to protect LCD panel prices. An Omdia report indicates a significant shift in the display panel industry, particularly in the LCD TV display segment.
North American TV sales during Black Friday and Chinese Double 11 promotions in 2023 were slower than anticipated, leading to an excess of TV inventories. This surplus is contributing to stronger price pressures from TV brands and retailers.
Chinese panel makers, who accounted for 67.5% of LCD TV display shipments in 2023, are planning to reduce their fab utilisation in response to market conditions. This move is aimed at sustaining LCD TV display prices by controlling supply.
Major Chinese panel manufacturers like BOE, China Star, and HKC Display are leading these cuts. They have decided to extend their Chinese New Year holidays, further reducing average fab utilisation to 51% in February 2024, compared to 72% for other makers.
Despite current challenges, there is a belief that display prices will start to recover after 1Q24. Chinese panel makers are experienced in managing LCD TV display prices through production-to-order policies (which means fab utilisation control). An increase in TV display demand is anticipated from 2Q24 due to major sporting events like Euro 2024, the Paris 2024 Olympics, and 2024 Copa América.
The escalating threat of attacks by Iran-backed Houthi rebels in Yemen targeting vessels en route to Israel has prompted a growing number of global shipping companies to suspend their Red Sea routes starting from mid-December 2023. This development has had a considerable impact on trade, notably increasing both the transportation time and costs for shipments travelling from Asia to Europe.
The first quarter of 2024 is poised to be a critical period for the display panel industry, with various factors converging to shape market trends and strategies. The industry is adapting to shifting demand patterns, with strategic utilisation cuts to stabilise or increase display prices.The decisions and adaptations made by panel makers, especially in China, will be key in determining the pace and nature of market recovery.
