China’s top panel makers, including BOE, TCL CSOT, HKC, and CEC-CHOT, are cutting production to support TV panel prices. Speculations indicate a capacity utilization drop below 60% in the first quarter, benefiting Taiwanese panel companies like Innolux and AUO. Despite these efforts, industry sources caution of a panel industry slowdown due to reduced demand, possibly resulting in lower TV panel prices, reported by TechNews.

The memory industry saw a big downturn due to major players like Samsung, SK Hynix, and Micron drastically reducing production. This resulted in a surge in memory prices and a gradual recovery for the entire memory industry. Panel makers may adopt a similar strategy to boost the overall panel industry as well.

Chinese panel companies currently command a global market share of over 70% in TFT-LCD, with the world’s top 3 LCD panel makers from China: BOE, TCL CSOT, and HKC. As China holds the largest share of panel production capacity, a reduction in production by major players could have a more substantial impact on the panel industry compared to the effects on the memory industry caused by Samsung, Micron, and others.

According to TrendForce’s report in November, BOE began adjusting its production levels in the Q3 and will continue to do so in Q4, with an estimated decrease of 7 percentage points in utilization rates. CSOT, on the other hand, maintained high utilization rates in Q3, supported by major customer stockpiling and the ramp-up of the T9 new production line. However, due to reduced procurement of TV panels by both in-house group brands and international frontline brands, CSOT’s utilization rate is expected to decrease by about 17 percentage points to 76% in Q4.

HKC, which still has two production lines not running at full capacity, anticipates a 14 percentage point decrease in its utilization rates for Q4. This is primarily due to the need to reduce production of one of its main products, the 32-inch TV panel, to alleviate inventory pressures and avoid significant price drops.

In response to this, both Innolux and AUO express their intention to dynamically adjust production capacity utilization in line with market conditions. This strategic flexibility is aimed at fostering a more robust and balanced industry order.

Overall, most panel makers are adopting a more conservative approach to production for 1Q24. Furthermore, several panel makers have indicated a two-week Lunar New Year shutdown for 2024. As a result, TrendForce anticipates that overall Gen5+ LCD panel utilization rates may be revised down to 70% or lower in 1Q24 to maintain the market supply-demand balance.

(Image: BOE)

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• [News] Samsung Ends Partnership with BOE! AUO Welcomes the Diversion Effect, but Capacity Challenges Loom
• Gen5+ LCD Panel Utilization Rates to Reach Approximately 72% in Q4, with Potential Further Decline in 1Q24, Says TrendForce
• [News] AUO Reports Strong Growth in Automotive Panel Revenue and Positive Outlook for IT Panels

According to TechNews’ report, due to ongoing technology infringement disputes and the uncertainty in the tense relations between China and the United States, Samsung Electronics is cutting ties with the leading Chinese display supplier BOE. They are restructuring their supply chain, and other panel manufacturers such as AU Optronics (AUO), Sharp, and LG Display (LGD) are expected to benefit.

According to the Korean media outlet BusinessKorea’s report, industry insiders from South Korea revealed on the 15th that BOE is no longer among Samsung’s top three suppliers for TV panels in Q3, and its market share is starting to decline.

BOE accounted for approximately 10% of Samsung’s TV panel procurement in the first half of the year, originally ranking third among major panel suppliers.。

From the Q3 financial report, it is evident that Samsung has removed BOE from the main supplier list for TV and display screen device panels in the Device Experience (DX) division. This marks the first time since Q4 2015. Analysts believe that Samsung aims to restructure its partner relationships, focusing on domestic enterprises.

Samsung Electronics is planning to sever its medium to long-term partnership with BOE, primarily due to a patent infringement lawsuit involving its subsidiary Samsung Display (SDC) and BOE.

Insiders have revealed that collaboration between Samsung and BOE in the mobile phone panel sector has already ended. As for TV panels, the relationship has become tense due to significant cost pressure on Samsung caused by the panel manufacturer aggressively raising TV panel prices.

South Korean industry insiders anticipate that Samsung will increase collaboration with other suppliers, including LGD, Sharp, and AUO. Industry experts suggest that for next year’s TV panel procurement allocation, Samsung intends to increase the proportion of panels sourced from Japanese, Taiwanese, and South Korean manufacturers.

However, considering the significant production capacity of Chinese panel manufacturers and their production advantages in certain sizes, Samsung does not plan to completely sever cooperation.

Currently, Chinese panel manufacturers maintain an absolute advantage in global production capacity and are working to mend customer relationships. Besides, AUO’s TV panel production capacity may not be able to fully meet customer demands.

Reportedly, in preparation for the supply chain restructuring, LGD plans to increase the utilization rate of its LCD plant in Guangzhou, China, raising shipments from 9 million units this year to 16 million units next year.

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• [News] AUO Reports Strong Growth in Automotive Panel Revenue and Positive Outlook for IT Panels
• [Insights] Late-November Price Update: Tug of War in Prices! Drop Anticipated in Large-sized High-end Monitor Panel

(Photo credit: AUO)

TrendForce released the early November panel price trends today, with TV panel prices experiencing an unstoppable decline, while MNT (Monitor) and NB panel prices remained relatively stable.

TV panel

Entering the fourth quarter, TV panel shipments continue to weaken. However, the attempt by agents to influence panel prices through a surge in shipments of small-sized TV panels seems to have subsided, and panel prices are returning to a more balanced negotiation between buyers and sellers.

Major TV brands have been adjusting their orders since the latter half of the third quarter, and these adjustments have expanded into the all panel sizes in the fourth quarter.

Although panel manufacturers are still controlling production, it appears that they are finding it challenging to resist the decline in panel prices due to sluggish demand. As of the current outlook, it is expected that in November, panel prices will decrease by 2-dollar for the entire month in the sizes of 32″, 43″, 50″, and 55″, while sizes of 65″ and 75″ will experience a 3-dollar drop, and 85″ will face a 5-dollar decline.

MNT Panel

Entering the fourth quarter, demand for MNT panels has started to weaken. In October, mainstream panel sizes showed a tendency to stabilize in terms of pricing, with only some high-end models having slight room for price reductions, especially for high refresh rate specifications.

Currently, it is expected that panel manufacturers will continue to maintain a stable price trend for mainstream size MNT panels in November. However, should brand demand fall short of expectations, there is a possibility of price decreases, particularly in Open Cell panels or in larger-sized, high-end models.

NB Panel

Entering the fourth quarter, demand for NB panels continues to weaken. However, panel manufacturers remain committed to maintaining stable panel prices, especially as they face downward price pressures in TV and MNT panels. Panel manufacturers are reluctant to make significant concessions on NB panel prices, except for the possibility of offering certain discounts through project-based bundling models.

Currently, it is expected that NB panel prices, whether for entry-level TN panels or mid- to high-range IPS panels, will continue to maintain a stable trend in November.

According to TechNews’ report, during its Q3 financial briefing, AU Optronics (AUO) revealed that its automotive panel revenue has surpassed 3.3 billion NTD, with expectations to exceed 4 billion NTD for the year. This signifies a growth rate of over 20%, highlighting AUO’s robust presence in the automotive panel market.

Notably, AUO has officially started shipping Human-Machine Interface (HMI) panels, accounting for over 10% of its automotive panel revenue. With strong long-term order visibility, it is anticipated that HMI Display will constitute over 40% of the automotive panel revenue by 2025, demonstrating AUO’s shift from pure automotive panels to HMI solutions. The company estimates that automotive products will contribute to 20-25% of its total revenue.

In the automotive sector, AUO has invested in intelligent cockpit solutions from companies like Adlink, Sintrones, Carota, and Cruise10. However, it currently lacks Tier1 partners in its ecosystem. The acquisition of BHTC, a German automotive supplier, is expected to enhance AUO’s global automotive footprint.

Regarding display sales, AUO noted a 2% decline in TV panel sales during Q3, but with an increase in average panel size to 50 inches, resulting in larger shipment areas. The market has adjusted to a stable state, with the best performance seen in the U.S. market, demonstrating 30% year-on-year growth.

Emerging markets, especially India, continue to show growth, while the Chinese 618 promotion was relatively subdued. Although shipment volumes have slowed, strong sales of larger panels, especially with numerous promotional events towards the year-end are expected to drive a new wave of demand.

Looking forward to next year, AUO maintains an optimistic stance, as it believes that inventory corrections are gradually stabilizing. Additionally, with the anticipation of three major events in 2024 and clients expressing their optimism, AUO is confident in expecting substantial growth for the upcoming year.

Regarding the IT panel sector, the back-to-school programs in the third quarter contributed to a portion of the demand. Customers actively prepared in the transition from the second quarter to the third quarter.

Presently, there is a visible trend of overall sales stabilizing, approaching a level close to the previous year. AUO anticipates that the fourth quarter may witness a positive year-on-year growth situation, as sales in the IT industry return to a normal trajectory. The fourth quarter is expected to yield satisfactory sales.

Looking ahead to the following year, many customers are optimistically gearing up for AI PCs, in addition to Windows system transformation requirements. If the fourth quarter sees stable demand and new products continue to captivate consumers, AUO holds a relatively optimistic outlook for the upcoming year.

AUO estimates that their total capital expenditure for the full year 2023 will be revised down to approximately 30 billion NTD. In the third quarter, their capacity availability rate is at around 80%, and they predict it will slightly decrease in the fourth quarter compared to the third quarter. Capital expenditure in the third quarter amounts to 900 million NTD, and the full-year capital expenditure target for this year will be adjusted down to 30 billion NTD.

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• [News] AUO and PlayNitride Sign NT$700 Million Deal for 6-inch Micro LED CoC Line in Taiwan

(Photo credit: AUO)

With the approach to the end of 2023, TrendForce revealed the tech trends in every sector, apparently, AI continues as the main focus to decide the direction of how the tech supply chain will be in the next few years, here are the seeings:

CSPs increase AI investment, driving a 38% growth in AI server shipments by 2024

• CSPs increase AI investment, fueling a 38% growth in AI server shipments by 2024.
• Major CSPs like Microsoft, Google, and AWS are driving this growth due to the rising popularity of AI applications, pushing AI server shipments to 1.2 million units in 2023.

HBM3e set to drive an annual increase of 172% in HBM revenue

• Major memory suppliers are set to introduce HBM3e with faster speeds (8 Gbps) to enhance the performance of AI accelerator chips in 2024–2025.
• HBM integration is becoming common among GPU manufacturers like NVIDIA and AMD, and it is expected that HBM will significantly contribute to memory suppliers’ revenues in 2024, with an annual growth rate of 172%.

Rising demand for advanced packaging in 2024, the emergence of 3D IC technology

• Leading semiconductor firms like TSMC, Samsung, and Intel are emphasizing advanced packaging technology’s importance in boosting chip performance, conserving space, reduce power usage, and minimize latency. They’re establishing 3D IC research centers in Japan to underscore this role.
• Generative AI is driving increased demand for 2.5D packaging tech, integrating computing chips and memory with a silicon interposer layer. Additionally, 3D packaging solutions like TSMC’s SoIC, Samsung’s X-Cube, and Intel’s Foveros.

NTN is set to begin with small-scale commercial tests, broader applications of this technology are on the way in 2024

• Collaboration between satellite operators, semiconductor firms, telecom operators, and smartphone makers is growing due to increased satellite deployments by operators. This collaboration focuses on mobile satellite communication applications and bidirectional data transmission under specific conditions.
• Major semiconductor manufacturers are ramping up efforts in satellite communication chips, leading top smartphone manufacturers to integrate satellite communication into high-end phones using the SoC model, which is expected to drive small-scale commercial testing of NTN networks and promote widespread adoption of NTN applications.

6G communication to begin in 2024, with satellite communication taking center stage

• 6G standardization begins around 2024-2025, with initial technologies expected by 2027-2028. This enables novel applications like Reconfigurable Intelligent Surfaces (RIS), terahertz bands, Optical Wireless Communication (OWC), NTN for high-altitude comms, and immersive Extended Reality (XR) experiences.
• Low-orbit satellites will play a key role in 6G as its standards solidify, peaking around the time of 6G commercialization. The use of drones for 6G communication and environmental sensing is also set to surge in the 6G era.

Innovative entrants drive cost optimization for Micro LED technology in 2024

• In 2023, the focus in Micro LED display technology is on cost reduction through chip downsizing, aiming for at least a 20-25% annual reduction. A hybrid transfer approach, combining stamping and laser bonding, is gaining attention for efficient mass production.
• Micro LED holds potential in micro-projection displays for transparent AR lenses. Challenges include achieving ultra-high PPI with 5 µm or smaller chips, particularly with red LEDs’ low efficiency. Various innovative approaches, such as InGan-based red LEDs and vertically stacked RGB LEDs.

Intensifying competition in AR/VR micro-display technologies

• Increasing AR/VR headset demand drives demand for ultra-high PPI near-eye displays, with Micro OLED technology at the forefront, poised for broader adoption.
• Challenges in brightness and efficiency impact Micro OLED displays and their dominance in the head-mounted display market depends on the development of various micro-display technologies.

Advancements in material and component technologies are propelling the commercialization of gallium oxide

• Gallium oxide (Ga₂O₃) is gaining prominence for next-gen power semiconductor devices due to its potential in high-voltage, high-temperature, and high-frequency applications in EVs, electrical grids, and aerospace.
• The industry is already producing 4-inch gallium oxide mono-crystals and advancing Schottky diode and transistor fabrication processes, with the first Schottky diode products expected by 2024.

Solid-state batteries poised to reshape the EV battery landscape over the next decade

• Major automakers and battery manufacturers are investing in solid-state and semi-solid-state battery technologies, aiming for a new cycle of technological iteration by 2024.
• After Li-ion batteries, sodium-ion batteries, with lower energy density, are suitable for budget-friendly EVs, and hydrogen fuel cells offer long-range and zero emissions, primarily for heavy-duty commercial vehicles, with widespread adoption expected after 2025, despite challenges.

BEVs in 2024 rely on power conversion efficiency, driving range, and charging efficiency

• Automakers are optimizing battery pack structures and material ratios to increase energy density and driving range. Solid-state batteries, with high energy density, may see limited installations in vehicles as semi-solid batteries in 2H23.
• The 800V platform will enable high-power fast charging, leading to the expansion of high-power charging stations. AI advancements are driving EVs toward advanced autonomous driving, with Tesla’s Dojo supercomputer investing in neural network training to maintain its position in the intelligent driving market.

Green solutions with AI simulations emerging as a linchpin for renewable energy and decarbonized manufacturing

• Under the background of optimizing energy consumption, creating interconnected data ecosystems, and visualizing energy flow and consumption. Carbon auditing tools and AI are key for organizations aiming to reduce carbon emissions and enhance sustainability.
• The IEA predicts global renewable energy generation to reach 4,500 GW by 2024, driven by policy support, rising fossil fuel prices, and energy crises. The adoption of AI-driven smart technologies in peripheral systems for stable energy generation.

OLED’s expansion will across various applications driven by the innovation of foldable phones

• OLED folding phones are improving in design by using lightweight materials, innovative hinge structures, and cost-reduction efforts to approach the thickness and weight of traditional smartphones.
• In the IT sector, industry players like Samsung, BOE Technology, JDI, and Visionox are making significant investments and developments in OLED technology to expand into various markets. Anticipated advancements in technology and materials are expected to increase OLED market penetration by 2025.