DSCC downgrades display spend
February 15, 2023
By Chris Forrester
Modern TV sets start with panels. Sometimes high-end and still fairly expensive OLED devices, and other times slightly lower-specified alternates. But Display Supply Chain Consultants (DSCC) says that manufacturers are not maintaining their Capital Expenditure when 2023 is compared with 2022 and earlier, and forecast a dramatic drop in CapEx this year.
DSCC has downgraded its estimates for 2023 display equipment spending in their latest study by another 13 per cent to just $3.8 billion, the lowest since 2012.
The decline can be attributed to weak end market conditions which are causing panel manufacturers to push out capacity increases. Display demand remains soft with too much demand pulled into 2020 and 2021 during Covid along with inflation and slower economic growth further weakening 2022 and 2023 demand. DSCC’s data shows that demand on an area/regional basis fell by 2 per cent in 2020 and by 3 per cent in 2021.
“However, this [trend] led to a 3 per cent drop in 2022 and will contribute to an 8 per cent decline in 2023 vs DSCC’s 2020 forecast. It will take until 2026 for demand to get back on schedule. At the same time, too much supply was added relative to demand in 2021 and 2022 leading to unusually low fab utilisation and large losses for panel makers from H2 2022 and into 2023. With demand not responding to record low prices and recessionary concerns weighing on the future demand outlook, panel manufacturers are pushing out all the capex they can. This means dedicated display equipment suppliers are essentially in survival mode in 2023,” noted DSCC.
DSCC says that 2023 display equipment spending is expected to be down 68 per cent vs $12 billion in 2022.
“We are downgrading OLED equipment spending by 11 per cent and LCD spending by 24 per cent vs our Q4 2022 report as panel manufacturers continue to delay new capacity as current capacity remains under-utilised. This means LCD spending will be down 75 per cent in 2023 with OLED spending down 64 per cent. There is the potential for the $1.5 billion in LCD spending to shrink further as a couple of key Q4 2023 deliveries could be pushed out further into Q1 2024 or later although larger equipment companies may not be affected by this move due to existing contracts in place,” concluded DSCC.