Demand for large-size LCD panels during the first half of 2017 will be above the level expected for the usual off season, according to WitsView, a division of TrendForce. This latest forecast is attributed to the closure of Samsung Display’s L7-1 fab and Sharp’s decision to halt supplying TV panels to Samsung Electronics. The market situation will become more uncertain in the second half of 2017 as important variables will influence panel supply and demand. WitsView forecasts that the glut ratio of large-size panel market for 2017 will be 3.2%, which is the almost the same as this year’s estimate of 3.3%. Note that “glut ratio” is a special index used by WitsView to measure market oversupply.
As demand has outstripped supply for the second half of 2016, the large-size panel market was expected to see a correction in the off season of the first half of 2017. However, Sharp’s decision to stop supplying Samsung Electronics has caused a disruption in the TV panel supply. As Samsung Electronics scrambles for other sources of TV panel supply, its competitors will also become more aggressive in their panel purchasing strategies. The anxiety over a possible supply gap among TV brands will inadvertently prop up demand and tighten supply during the off-peak period of the first quarter.
Going into the second quarter of 2017, WitsView forecasts that the large-size panel market will experience limited downward price corrections. Even though branded device vendors will use the second quarter to reduce their excess inventories, they will also need to prepare for the series of major promotional events that will take place the year’s second half. Some buyers may even choose to place orders in advance to avoid the risk of panel shortage in the busy season. Therefore, WitsView believes the overall purchases of large-size panels will not drop significantly in the first half of 2017 as the state of market demand will not be consistent with seasonal pattern.
Two important variables will influence the large-size panel market in the second half of 2017. The first concern is related to the extent of the downward price correction in the first half of the year. Branded device vendors may scale back their year-end promotional offerings if their product margins are being squeezed by high panel prices. The other major factor is whether there will be a sudden surge of panel supply in the latter half of 2017, when around 70% of the planned additional capacity for large-size panels for the entire year will become available. In sum, panel makers are likely to encounter pressure to lower their quotes in the third quarter as supply starts to get ahead of demand despite the arrival of the year-end holiday season.