TrendForce reports that the utilization rates for the Gen5+ LCD panel industry (by area) are estimated to decrease by nearly 9.2 percentage points from the third quarter, reaching 72.2% in Q4. This forecast comes amid a backdrop of reduced TV panel procurement by TV brands, who are adjusting to operational pressures and rising inventory levels that began in the third quarter. Additionally, signs of weakening IT panel demand emerged at the end of Q3. To prevent inventory carryover into 2024, panel makers have continued to regulate production throughout the fourth quarter.
BOE began adjusting its production levels in the third quarter 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. Additionally, there is a slowdown in stocking momentum for LCD monitor panels from their own ODM and the South China market.
In terms of Taiwanese manufacturers, AUO has adhered to a strategy of not accumulating inventory, coupled with a reduction in the production of low-margin products that may lead to losses. AUO's utilization rate is expected to fall by 14 percentage points from the previous quarter. Innolux was affected by the shutdown of Fab4, expecting a 4 percentage point decrease in its utilization rate for Q4.
Peak season stockpiling has concluded as we enter November, giving way to the traditional off-season, which will inevitably increase the pressure on factories. Consequently, 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.
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