A report from Display Supply Chain Consultants (DSCC) warns that “robust” demand for new TV sets from the US and China and combined with capacity reductions out of South Korea is leading to price rises in LCD panels during Q3. However, the price rises are helping panel manufacturers improve their profit margins which have been under pressure for some years.
DSCC is updating its data and forecast for TV panel prices for the rest of 2020 and adding a forecast for the first half of 2021, and the researchers now expect double-digit percentage increases for some TV sizes in Q3/2020 compared to Q2/2020.
DSCC says that prices hit all-time lows in Q4 2019, but the industry saw a brief price bump in Q1 after the two Korean panel makers announced capacity cuts. “That price increase was cut short by the Covid-19 pandemic, and fears of a demand slowdown, so prices in Q2 dropped back down to roughly the same levels as Q4 2019, with certain sizes hitting all-time lows and other sizes slightly higher than their Q4 2019 trough. Starting in June, we have seen another price bump, bringing prices above their recent high points of Q1 2020, to prices last seen in the summer of 2019,” says DSCC.
“We now expect prices to increase in Q3 for all sizes of TV panels except 75”, with double-digit percentage gains in sizes from 32” to 55”. Although we continue to expect that the long-term downward trend will resume in Q4, and that TV panel prices will hit new all-time lows in Q1 2021, the situation remains dynamic, and with the pandemic raging it seems like an eternity between now and the end of the year,” adds DSCC.
“Our forecast presumes a weaker-than-normal holiday selling season in Q4, based on the idea that the surge in demand in Q2 has pulled demand forward. This view is shared by NPD’s Stephen Baker, but many variables surrounding the pandemic, the global economy, and political unrest could affect the outcome. We are now projecting another panel price increase starting in Q2 2021, based on demand related to the Tokyo Olympics, if they continue to be held as currently planned,” says DSCC.
There is some good news, at least for buyers of 75”-sized panels. DSCC says: “These largest TV panels sell at a premium price in terms of area. The gap in price per square meter between 75” and 65” is still very wide at $37 per square meter in August but has closed from more than $50 per square meter at the beginning of the year. The current price gap represents a 25 percent area price premium for 75” over 65”. Viewed another way, Gen 10.5 fabs can generate $1752 of revenue per substrate making 75” panels 6-up at August prices, compared to $1408 of revenue making 65” panels 8-up or $1350 making 43” panels 18-up. Thus, the big fabs still have a generous incentive to make 75”, which will lead to continued price pressure on those larger sizes.”