In a series of 2021 predictions in a report from Bob O’Brien of the Digital Supply Chain (DSCC) he suggests that LCD television panel prices will remain higher in 2021 than in 2020 at least until Q4 this year.
O’Brien says: “2020 started with panel prices rising after Samsung and LGD announced that they would shut down LCD capacity to shift to OLED. Then the pandemic hit and led to panicked price reductions as everyone feared a global recession, until it became clear that stay-at-home orders and lockdowns resulted in increased demand for TVs. Prices started to increase in June, slowly at first and then accelerating in Q4 to end the year up more than 50 per cent.”
“While Q1 would normally be the beginning of a seasonal slowdown for TV demand, we do not expect that panel prices will decline because of fears of a glass shortage resulting from a power outage at NEG coupled with Gen 10.5 glass problems at Corning. By the end of Q1, though, glass supply will be restored and the seasonal falloff in demand in the spring and summer months will lead panel prices to fall,” he added.
“The big increases in LCD TV panel prices have led Samsung and LG Display to change their plans and extend the life of LCD lines. These companies are making the sensible decision that they should continue to run lines that bring in cash, but the spectre of shutdown will remain hanging over the industry. Although prices will fall, they will remain above 2020 levels through the summer and panel prices are likely to stabilize in the 2nd half of 2021 at levels substantially higher than their all-time lows of Q2 2020.”
He also adds that this time last year saw most observers suggesting – and anticipating – that LCD displays were ‘old technology’ and investment in LCD output would slow. “The two Korean panel makers, who once dominated the LCD industry, announced that they were withdrawing from LCD to focus on OLED. Investment in China increasingly focused on OLED. During 2020, it became increasingly clear that this assessment was premature, and LCD has a lot of life left. Strong demand led to panel price increases, which greatly improved the profitability of LCD makers. Furthermore, LG’s struggles with manufacturing its White OLEDs in Guangzhou, and many panel makers’ struggles with increasing yields on OLED smartphone panels, reminded the industry that OLED is difficult to make and substantially higher cost than LCD. Finally, the emergence of MiniLED backlight technology provided the incumbent LCD technology with a performance champion to challenge OLED.”
O’Brien says that the South Korean’s have reversed their slowdown plans, or at least delayed closing LCD fabrications plants. “This will help to keep supply/demand in balance for 2021, after the Q1 glass shortage is alleviated. However, capacity additions for OLED fall short of the ~5 per cent per year area growth in demand that we expect, and LCD will be in increasingly tight supply unless new capacity is added.”