LCD panels will continue to dominate the market in the medium and long term, and the cyclical attributes are changing
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LCD panels will continue to dominate the market in the medium and long term, and the cyclical attributes are changing
In recent years, the market competition of the global LCD panel industry has undergone great changes. In 2023, there are only eight of the ten large-size LCD panel factories in the world; China's mainland LCD panel factory shipments in the global market share began to break through 70%; Since February, although the market terminal retail demand has not seen a significant improvement, LCD panel prices have risen all the way to date.
Under the great changes, practitioners in the industry began to think carefully about the long-term value of the LCD panel industry.
We believe that: in the next 5-8 years, L CD panel will still be the mainstream technology products in the display industry; Also, the periodic nature of the CD panel is weakening.
The above judgment is carried out from six aspects.
First, in the visible future, the supply of LCD panel capacity is stabilizing or even decreasing.
1)LCD panel capacity expansion comes to an end, and the low generation line exits.
In addition, CEC Panda has closed the G6 plant with a monthly production capacity of 90K large boards at the end of 2022. Globally, in the foreseeable future, except for Vedanta G8.6 generation production line, which may be mass-produced in India as soon as 2026, there are no new LCD production lines planned, and the overall capacity growth rate remains at an extremely low level.
2) Japan and South Korea production line competitiveness is insufficient, the next few years will exit the LCD market competition, or transformation or closure.
Subject to factory cost pressure and profit challenges, Samsung has sold China's Suzhou G8.5 production line to the Chinese mainland manufacturer Huaxing Optoelectronics (CSOT), and its three LCD production lines in South Korea completely switched to QD OLED, and completely withdrew from the LCD panel market.
LGD Korea Paju P7 G7.5 plant with a monthly production capacity of 160K large board has been closed in Q4 2022, Guangzhou plant under the loss reduction strategy is currently shutting down Phase2 production capacity of 100K, only 110K remaining capacity operation, and actively seeking to sell.
3) China's Taiwan capacity exports are shifting to differentiated applications and products.
Taiwan's two largest panel manufacturers, Innolux and AUO, continue to transform their product portfolios and application scenarios. Inolux has planned to shut down its Fab4 G5.5 production line with a monthly capacity of 150K in early 2024, or switch to semiconductor-related flat panel liquid crystal antennas for the low-orbit satellite market. Inolux's 350K large-board G6 production line and AU's 260K large-board G6 production line are expected to shift to differentiated applications such as industrial control and X-ray in 2024, and the capacity that can be allocated to traditional applications such as displays and TVS is decreasing.
From the perspective of the largest shipping area of TV panels, according to the forecast data of RUNTO Technology, in 2023, the global shipments of LCD TV panels will be 246 million pieces, down 2.5%. By 2027, annual shipments will not exceed the 2020 high of 268 million tablets.
Second, the demand area: the main application categories still maintain stable growth.
The number of terminals in the display industry will remain stable in the next few years, but due to the growth of average size, the display area will maintain a compound annual growth rate of more than 3% from 2020 to 2030.
1) The largest downstream application of global display panels is TV, which accounts for more than 70% of the display panel shipment area. The large size of the two major TV markets in China and the United States has developed rapidly, driving the large size of the global panel to accelerate growth. According to Omdia data, from 43.5 inches in 2017 to 48.5 inches in 2021, an increase of about 1 inch per year.
Among them, according to RUNTO data, the Chinese TV market in the first quarter of 2023, the 65-inch market share has exceeded 55 inches, becoming the largest size, and the demand for 75+ inches has entered a period of rapid growth. By June 2023, the average size in China has exceeded 60 inches.
In 2022, the average size of the U.S. TV market will be 51.4 inches, and it is expected to increase by 1 inch to 52.4 inches by 2023.
2) Many areas of commercial and public information display (C/P ID), such as tourism, catering, retail and transportation, play a crucial role in the consumption of large-size LCD panels. In the short term, it is expected that the demand for LCD commercial displays will increase by at least 10% in 2024. In the long term, artificial intelligence (AI) is gradually becoming integrated into People's Daily lives. As an important human-computer interaction interface at present, display technology, especially touch feedback display technology, will be rapidly popularized to all aspects of human life under the promotion of AI.
The first and two points are combined to obtain the view: between the fluctuation of supply and demand at both ends, the probability of a large range of oversupply of the display panel in the future is low, and the overall state of mild fluctuation is maintained.
Third, the existing competitive technology: the LCD basic disk is stable, and the replacement threat is controllable.
In large-size display applications such as displays and TVS, OLED does not have an advantage, and LCD will remain the mainstream of the market in the next 5-10 years. OLED is mainly developed in the field of small size.
According to RUNTO data, in 2022, the total area of the global display panel market shipments is about 240 million square meters, of which, the shipment area of LCD panels is 93%, occupying an absolute advantage, and OLED panels are only 6.8%.
1)LCD panel application field is rich. In the TV field, LCD shipments accounted for 96% of the total area in 2022, which is absolutely dominant. OLED is limited by its own high cost, low yield and other factors, as well as the Mini LED backlit LCD and its more and more close to the performance, superimposed more and more difference, currently only used for many TV brands of a small number of models, the actual sales are extremely limited, and in the past two or three years there is a decline in the trend, not enough to create an alternative threat to LCD technology. In fact, in the field of large-size TVS, Mini LED backlit LCD TVS will gradually become popular and become the main force of large-screen display.
In the future, OLED should be reduced to the same production cost as Min LED backlit LCD, and the share needs to be rapidly pulled up to have a chance, but the current opportunity is slim. In addition, the OLED upstream industry chain presents a high degree of monopoly, and the threshold is high, which is quite unfavorable to the OLED panel production capacity supply.
2) In the display field, in 2022, the global LCD display shipment area is 26.55 million square meters, accounting for 99.8%, and the OLED display shipment area is only 43,000 square meters, accounting for only 0.2%. At least for the next three years, the main evolution direction of displays will be also dominated by Mini LED-backlit LCD displays, rather than OLED.
3) In the field of notebook and tablet computers, in 2022, the global LCD panel accounted for 97% of the overall shipment area, which is also in a dominant position. Since 2020, although OLED has begun to introduce into the market, in terms of market share, the market share is still very small compared to LCD panels, and the shipment area in 2022 accounts for only about 3%. The lack of cost performance is the main reason for the relatively slow growth of OLED permeability.
The next market variable lies in Apple's application of OLED in the IT market, as well as Samsung Display and LGD's investment in the G8.5+ production line of IT OLED panels. At the most optimistic development rate, OLED panels with high PPI will enter the IT market in batches after 2025; And large-scale replacement is still far off.
4) In the field of mobile phones, OLED penetration is faster, and it is expected that by 2028, OLED will reach nearly 50% penetration. However, LCD panels, with their cost advantages, can still hold the low-end market, and global demand will not disappear. In addition, according to Omdia data, the mobile phone category will only account for less than 8% of all display panels in 2022.
Four, the future possible technical route: Micro LED technology is difficult to commercialize, home.
From the perspective of patent layout, technical characteristics, technological breakthroughs, and industrial chain bottlenecks, the development opportunities of Micro LED are likely to surpass OLED and become a more widely used display technology.
But it is far from large-scale commercialization. In the next five years, the application of Micro LED will be limited to the commercial and public information display field, to enter the huge market of home TV continues to face three challenges: the technology is not standardized production, the supply chain is too complex, and the cost is high. The number and size of applications in the commercial utility and home markets are far from the same order of magnitude.
According to RUNTO data, in 2022, the global Micro LED TV shipments are less than 2,000 units, and it is optimistic that three years later in 2025, the global Micro LED TV shipments are about 30,000 units, less than 0.02% of the overall market.
Based on technology maturity, cost advantage, performance comparison and the breadth of application fields, LCD panels are still the absolute mainstream of the market for a long time to come, and the alternative risks posed by LED and Micro LED are expected to be controllable.
FIVE. Changes in the competition and operation of global manufacturers: the right to speak has shifted to China, the concentration has increased, and the production has been determined by sales
In January 2023, the ten TV panel factories in the world became eight without Samsung and CEC.
In addition, the operating strategy of large panel manufacturers is changing. The two panel price increases in October 2022 and February 2023 are successful attempts and practical operations by panel manufacturers to adjust panel price fluctuations by controlling the operating rate.
Today's panel factories give up the pursuit of market share and turn to the pursuit of operating profits, when the market is highly concentrated, it is easy to form a consensus on the regulation of the operating rate.
Six, through the operational strategy to weaken the cyclical panel industry.
The cyclical nature of the panel industry is mainly due to the capacity and demand cycle and the degree of alignment with the economic cycle.
Display panel is a heavy asset resources of industrial products industry, the participation of enterprises relative to other industrial areas less, input-output cycle is long, in the industry boom peak, production capacity can not quickly follow up. A large amount of capital expenditure will inevitably produce a large amortization cost, which is strongly related to the volume and shipment, so in the industry downturn, the flexibility of capacity adjustment is also very small.
Most of the terminal application products of the panel are consumer electronics products, which are closely related to the economic cycle, and the market competition is full, and the demand changes rapidly; The panel, as the main core component upstream, requires a considerable reaction time. Finally, the lag of panel production capacity caused an imbalance between supply and demand during the reaction period, and the price amplitude of panel products was huge.
Theoretically, it is unrealistic to pursue the long-term stable balance of resource-based industrial products. However, with the clearance of the stock capacity in the industry and the slowdown of new production capacity, even if it enters the surplus cycle, panel manufacturers can still adjust by using the production and sales model. Therefore, the display panel industry will gradually transform from the past fixed large and strong cycle to a small and slow cycle of market regulation, and the volatility will be significantly reduced.
