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2020/12/30
Demand for IT panels skyrocketed in 2020 due to the rising popularity of WFH and distance education, in turn propelling large-sized display driver IC (LDDI) demand to 5827 billion units, a 23% growth YoY, according to TrendForce’s latest investigations In the upstream semiconductor supply chain, various foundries’ 8-inch wafer capacities have mostly been allocated to other chips with higher profit margins, in turn lowering the glut ratio of LDDI from 33% in 2019 to 17% in 2020, representing a tightening supply
On the other hand, TrendForce analyst Jeff Yang indicates that the LDDI market has been exhibiting increased prices as a prerequisite for ensuring increased supply in 2H20 LDDI prices rose by 20-30% QoQ throughout the two quarters in 2H20 due to developments in both the upstream and downstream semiconductor supply chain: In the upstream, foundries increased quotes for LDDI manufacturing on two separate occasions Conversely, in the downstream, OSAT capacities have been insufficient, and prices for gold used in IC gold bump connectors have been trending high as well
With regards to LDDI supply, there has been very limited growth in 8-inch wafer capacities in recent years, whereas demand for CMOS image sensors (CIS) and power management ICs (PMIC) has been consistently soaring in comparison Since LDDIs are manufactured with the same process technology as the aforementioned chips but are less profitable, chips such as CIS and PMICs have crowded out LDDI manufacturing in foundries This, in addition to US sanctions against SMIC, which led suppliers to reassign their LDDI manufacturing orders to other foundries instead, resulted in a major supply crunch for LDDI Although Nexchip, a foundry based in Hefei, China, is expanding its 12-inch wafer capacities in response to LDDI market demand, total LDDI supply will not undergo a noticeable increase until 2H21 at the earliest LDDI supply is thus likely to rise slightly next year, with a 18% growth YoY
With regards to LDDI demand, the trend for TV panels to move towards larger sizes and higher resolutions in 2021 will also drive up LDDI consumption Furthermore, as panel manufacturers have set an aggressive shipment target for IT panels next year, total LDDI demand is expected to increase by 25% YoY in 2021 These manufacturers will aggressively procure LDDIs in 1H21 primarily for the following three reasons: First, while the movement of COVID-19 pandemic remains uncertain, IT panels will represent a major source of LDDI demand given the expected high demand for IT panels Secondly, as third quarters are traditionally a period of cyclical upturn for TV panel shipment, the possibility that the overall panel demand enters a rapid downturn in 3Q21 is relatively low Finally, ensuring a healthy supply of components will become a top priority for panel manufacturers because the tightening supply of 8-inch wafer capacities has become increasingly noticeable
On the whole, end-product demand for panels will remain high in 2021, meaning LDDI supply will likewise become an even more pressing issue The glut ratio of LDDIs is expected to drop even further next year, from 17% in 2020 down to 11% in 2021, with the supply crunch remaining unalleviated throughout the first three quarters of the year As such, the risk posed by LDDI shortage will potentially generate a certain degree of support for panel prices next year, while supply chain management and inventory management will become key to panel manufacturers’ success in the industry
For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms Vivie Liu from the Sales Department at graceli@trendforcecom
2020/10/15
Chinese manufacturers are expected to raise their market share from 39% this year to 52% next year in the monitor panel market, and 36% to 39% in the notebook panel market, according to TrendForce’s preliminary shipment forecast of panel makers for 2021 As such, these manufacturers are expected to maintain their plans of transitioning some production capacities from TV panel manufacturing to IT panel manufacturing in spite of the TV panel shortage in 2H20 caused by various factors such as the closedown of SDC’s LCD panel manufacturing operations, the rise of the stay-at-home economy, and the stimulus policies instituted by governments worldwide
TrendForce indicates that, with regards to the standing of Chinese manufacturers in the IT panel industry, BOE has long established itself as the market leader, while CSOT and HKC are each also catching up fast After acquiring SDC’s Suzhou-based Gen 85 fab, CSOT will possess even more production capacities for monitor panels At the same time, HKC currently maintains three Gen 86 fabs, located in Chongqing, Chuzhou, and Mianyang, and plans to capture additional shares in the monitor panel and notebook panel markets
As TV panel manufacturing transitions to Gen 105 fabs, Gen 85 and Gen 86 capacities will be used for monitor panel manufacturing
Chinese panel makers have been gradually transitioning their current panel capacities to monitor panel production Most significantly, as more Gen 105 production lines become available, TV panel production will most likely take place in Gen 105 fabs instead of Gen 85 fabs in the future, while the existing Gen 85 and Gen 86 production lines will be reallocated to monitor panel production in order to expend the excess capacity made available after TV panel production moves to Gen 105 fabs In addition, after SDC’s forecasted closing of LCD panel manufacturing operations at the end of this year, CSOT and HKC will look to capture the resultant supply share of SDC’s absence in the market On the other hand, since both TCL, which is CSOT’s parent company, and HKC possess monitor ODM operations, should the two companies decide to vertically integrate by making panels for their own monitor products, they will be able to effectively optimize their cost structures
CSOT targets mid-range and high-end LTPS notebook panel market, whereas HKC will primarily focus on the entry-level and mid-range notebook market
Although CSOT’s Wuhan-based T3 LTPS Gen 6 production line is primarily dedicated to smartphone and notebook panel manufacturing, the considerable reduction of LTPS smartphone panel demand from Huawei caused by US sanctions means CSOT is expected to make plans for an increase in notebook panel shipment in order to make up for the shortfall As well, thanks to high demand for TV panels this year, HKC’s production lines have been operating at maximum capacity utilization rates, in turn slowing down its notebook panel business However, in light of the fact that the COVID-19 pandemic has brought about a rapid surge in TN notebook panel demand, HKC is therefore looking to TN panels as a new commercial opportunity in the notebook display market and subsequently prioritizing TN panel development over IPS panel development as its product strategy Not only will this reprioritization allow HKC to align its strategy with the current market trend, but it will also quickly raise the yield rate of HKC’s Mianyang-based fab, which had never manufactured NB panels, by instead having the fab manufacture TN panels, which have a relatively simpler manufacturing process
Chinese panel makers will face challenges in their production plans as they enter the IT panel market
TrendForce analyst Jeff Yang indicates that, despite Chinese panel makers’ strong intention to enter the IT panel manufacturing business, success in the IT panel market is not solely decided by a company’s production capacity For instance, with regards to monitor panels, CSOT’s technical competency is mostly focused on VA panels, meaning the company is constrained in its product mixes due to its lack of mainstream IPS offerings Although HKC is equipped with both IPS and VA technologies, it lacks experience in manufacturing curved VA panels, leading its clients to take on a wait-and-see approach before placing additional orders For notebook panels, although CSOT is primarily focusing on the mid-range and high-end LTPS notebook panel market, it faces intense competition from Samsung’s OLED notebook panels, which are gradually extending from the high-end segment to the mid-range segment as well Likewise, HKC will have to take time in order to make headways in the notebook panel market, since it has not reached any production milestones, and it requires time to cultivate a significant client base
2020/08/05
BOE and CSOT strategically adjusted their Gen 85 production lines by shifting some production capacities from TV panels to monitor panels instead, according to TrendForce’s latest investigations At the same time, the COVID-19 pandemic generated a massive demand for WFH and distance learning, leading to an increase in IT product shipments As a result of these developments, the market share of Chinese monitor panel manufacturers rose to 38% in 1H20
Chinese panel manufacturers stepped up their efforts to capture shares in the monitor panel market as CSOT’s shipment surged in 1H20
BOE began mass producing TV panels at its second Gen 105 fab in Wuhan while strategically shifting some of its Gen 85 production capacity from TV panel manufacturing to monitor panel manufacturing, in turn allowing the company to ride the momentum of the pandemic-induced stay-at-home economy As well, SDC’s announcement of its exit from the LCD panel manufacturing business is expected to create an outlet for BOE’s production capacity, pushing BOE’s monitor panel shipment up to 202 million pieces in 1H20, a 19% increase YoY
CSOT’s monitor panel shipment fell short of 300,000 pieces in 1H19, but as the company aggressively pursued the curved VA monitor market in 1H20 following SDC’s exit, CSOT was able to quickly raise its shipment to 22 million pieces, a 633% YoY growth Owing to consistent panel demand from its sister company TPV, a major monitor ODM also under China Electronics Corporation, Panda registered a 4% YoY increase in shipment This growth also took place due to Panda’s long-term efforts in growing its clientele of PC brands On the other hand, with HKC’s Gen 86 production lines in Chuzhou, Mianyang, and Changsha starting to supply monitor panels between 2Q20 and 2021, Chinese panel manufacturers are projected to become more proactive in seizing shares in the monitor market going forward
As LGD remains the sole Korean panel manufacturer, Taiwanese companies look to stabilize profitability via optimizing their product portfolios
SDC announced that it will stop supplying LCD panels from Korea by the end of this year, with further plans to divest its Gen 85 fab in Suzhou, meaning LGD’s Gen 85 production line in Korea may remain the sole Korea-based source of panel supply next year Given the current massive influx of Chinese panel manufacturers in the market, Korean companies are expected to face further difficulties in maintaining their cost-competitiveness
Taiwanese panel manufacturers have turned their emphasis away from fab construction in recent years As they have been effectively adjusting their current panel capacities, Taiwanese manufacturers are no longer looking to maximize their shipments as the primary goal Case in point, Innolux’s management strategy is chiefly focused on product profitability, which involves limiting its supply of small-sized (such as 215-inch) monitor panels and raising their prices, as well as adjusting its production allocation of various application types, including TV panels, NB (notebook computer) panels, and monitor panels Also benefitting from SDC’s exodus is AUO The company is expected to see a strong panel demand from redirected orders for curved VA monitors in 2H20 Furthermore, with the cyclical peak sales season in the European and American markets occurring at the end of 2020, the corresponding panel shortage is projected to serve as an upward momentum for AUO’s panel prices
TrendForce analyst Jeff Yang indicates that, from the perspective of capacity expansion, the impending growth of Chinese panel manufacturers appears unstoppable SDC and Panda’s recent divestment efforts for their panel fabs in Suzhou and Nanjing/Chengdu, respectively, are projected to cause large-scale changes in the market supply of monitor panels in the future Panel manufacturers will likely consolidate in advance via capacity reduction, M&A, or fab acquisitions, leading to a more comprehensive and well-integrated panel industry going forward
2020/06/09
According to the latest investigations from the WitsView research division of TrendForce, issues with the NB (notebook computer) panel supply chain, such as material shortage, labor shortage, and logistic disruptions, were gradually resolved starting in April The resolution of these issues, combined with rising WFH and distance education demand brought about by the COVID-19 pandemic, resulted in a strong wave of panel demand in 2Q20 TrendForce projects 2Q20 NB panel shipment to reach 533 million units, a 177% increase YoY and 336% increase QoQ
TrendForce Research Manager Jeff Yang indicates that 1H20 NB panel shipment outperformed expectations set by the cyclical downturn of the period due to demand from WFH and distance education, while panel suppliers are now optimistic about the possibility for this demand to last until 3Q20 Given that the pandemic is expected to experience a slowdown in 2H20, the corresponding demand for notebook computers may also dissipate gradually Even so, as end markets begin to open in various countries, NB brands will shift their sales focus from commercial and public applications to the consumer market instead As well, the shipment momentum of NB panels is expected to last until 3Q20, driven by the restocking demand in NB brands’ channel markets However, with consumers in the post-COVID era projected to reduce their spending, the sell-through performance of end products will remain the key factor influencing the market for NB panels in 4Q20
On the whole, NB panel shipment saw subpar performance in 1Q20 due to the impact of COVID-19, but taking into account the surging demand in 2Q20 and improved market visibility in 3Q20, TrendForce projects NB panel shipment to reach 1881 million units this year, a 02% increase YoY
While the Rise of TN Panel Prices Is Clear, the Future of IPS Depends on LGD’s Development Going Forward
The status of NB panel supply this year is not too different from last year’s, with the top four suppliers, ranked by shipment volume, still being BOE, AUO, Innolux, and LGD, respectively These four companies together account for almost 90% market share in 1H20 TrendForce indicates that the supply of NB panels is much more oligopolistic relative to other types of panel applications, meaning the entrance of new suppliers does not significantly disrupt the market In addition to the concentrated nature of the NB panel market, the NB demand generated by the pandemic drove NB panel prices to an uptrend in 2Q20 However, due to cost considerations, notebook computers for educational and WFH purposes are mostly equipped with relatively low-end TN panels rather than IPS panels, which are more common in the consumer market As such, major suppliers of TN panels, including BOE, AUO, and Innolux, have increased the prices of their TN-based products in order to raise their products’ gross margins
Nevertheless, the long-term trend of NB panel development favors IPS technology LGD, a major supplier of IPS panels, will terminate the production of TV panels in its Korean fab by the end of this year and transition to the production of IT products in the future Therefore, LGD’s most important priority at the moment is to maintain the market share of its IPS panels, whereas raising its panel prices remains a secondary concern However, as the demand for consumer notebooks begins to recover, panel suppliers other than LGD will make a proactive effort to raise the price of IPS panels Whether LGD will follow this market trend or whether it will instead focus on maintaining its market share is a development that remains to be seen
2020/04/01
According to the latest investigations by the WitsView research division of TrendForce, the oversupply of TV panels in 2019 resulted in a major price drop As such, panel manufacturers hoped to utilize their excess capacity in 2020 through increasing their production of monitor panels, with Samsung Display (SDC) having the most extensive plans However, given the recent spread of the COVID-19 pandemic, the market has adopted a pessimistic outlook regarding end device demand The latest news indicates that SDC has informed its clients that it will exit the LCD market by the end of the year This news is expected to lead to a major reshuffle in the monitor panel market
TrendForce Research Manager Jeff Yang indicates that SDC is currently undergoing the difficult period of transitioning its TV panel production from LCD to QD-OLED Owing to its preexisting technical advantage in curved monitor panel production, Samsung was confident in achieving increased presence in the curved monitor market
Samsung’s production plans for monitor panels were previously as follows: SDC would produce IPS panels at its Gen 7 fab and curved VA panels at its Gen 85 fab in Korea It also intended to gradually transfer its VA production to the Gen 85 fab located in Suzhou, China in 2H20 This move was intended to allow Samsung to enjoy tax cuts from domestic sales to the Chinese market, where curved panels generally see higher popularity than in the European or US markets
SDC shuttered its L7-1 Gen 7 fab as early as 2017 and converted the fab into a production line for smartphone OLED panels, which are more profitable SDC currently commands very limited presence in the IPS monitor panel market, in which it holds a mere 9% share The company’s decision to close L7-2, another one of its Gen 7 fabs, to make room for additional smartphone OLED panel production therefore makes sense from an operational perspective
Conversely, SDC’s 35% share in the VA panel market and more than 70% share in the curved panel market establish it as the undisputed leader in those markets As well, it holds pole positions in high-curvature (about 1000R) panel technology and yield Before it fully transitions to QD-OLED production within the next two years, SDC is unlikely to struggle with maintaining its current leadership in VA panels, curved panels, and high-curvature panels The company would be premature to abandon these profitable markets at the current stage
From the perspective of supply and demand, the IPS panel market is currently facing excess supplies Aside from the two major suppliers LGD and BOE, Taiwanese manufacturers are also expanding their production capacities through equipment conversion Furthermore, HKC’s Mianyang fab will commence mass production this year SDC’s exodus from the LCD market is therefore projected to somewhat ameliorate the problem of IPS panel oversupply On the other hand, after SDC halts its production of curved VA panels, AUO and CSOT will become the sole remaining suppliers in the curved VA panel market, which is projected to exhibit a tight supply, in turn benefitting HKC, whose plans include mass producing curved VA panels at its Changsha fab next year
TrendForce initially forecasted an out-of-balance supply and demand in the 2020 monitor panel market similar to last year’s due to the 183% discrepancy between panel suppliers’ planned shipment of 1701 million units in 2020 and the 1438 million units shipped in 2019 However, Samsung Display’s decision to exit the LCD market early will alleviate the market’s oversupply situation
