LCD TV panel prices are expected to stop falling, panel factories may reduce production

Core Tip: The market expectation that the price of LCD TV panels will stop falling in the first quarter has failed. The LCD TV panel price indicator report recently released by the market research agency shows that in March, except for the 32-inch panel, which stopped falling for two consecutive months, the prices of other sizes of panels continued to decline. What is even more pessimistic is that the agency expects that in April, the price of 32-inch panels will drop, while the price of large-size panels will still drop significantly.
Market expectations that LCD TV panel prices will stop falling in the first quarter have failed. The LCD TV panel price indicator report recently released by the market research agency shows that in March, except for the 32-inch panel, which stopped falling for two consecutive months, the prices of other sizes of panels continued to decline. What is even more pessimistic is that the agency expects that in April, the price of 32-inch panels will drop, while the price of large-size panels will still drop significantly.

Expectations of a stop to fall in the first quarter were met with disappointment

Prices of LCD TV panels of various sizes fell differently. In terms of small size, Ovi Ruiwo said that the price of 32-inch panels was flat month-on-month in March, but it is expected to drop by $1/piece in April due to the overall panel cut orders.

In terms of medium size, Ovi Ruiwo expects 43-inch and 50-inch panels to maintain a decline of US$1/piece and US$2/piece respectively in April, but it believes that the price of 50-inch panels is close to the cash cost of manufacturers (referring to depreciation and costs of management, R&D, and selling expenses).

In terms of large size, Ovi Ruiwo believes that due to the cutting orders of leading brands and the increase in inventory pressure of panel factories, it is expected that the price of 65-inch and 75-inch panels will maintain a drop of 5 US dollars per piece in April. Sigmaintell believes that due to the weakening of international brand procurement demand and loose supply, the prices of the aforementioned two sizes of panels maintained a drop of nearly US$10/piece in March, and the price drop is expected to converge to US$6/piece in April.

Panels are a typical cyclical industry. After about three years of supply and demand adjustments and superimposed epidemic factors, LCD TV panels have ushered in the longest round of "price increases" in history since the second quarter of 2020. However, starting from August 2021, terminal demand has reached saturation, and the panel industry’s prosperity has turned downward and has continued to this day. The market generally expected that the decline in the first quarter of this year would stop falling, but after all, it failed to do so.

Li Yaqin, general manager of Sigmaintell, said in an interview with reporters, "At present, the price of LCD TV panels has not fallen below the cash cost, but is above the cash cost as a whole. It is expected that LCD TV panels will continue to decline in the second quarter. TV and notebook The prices of panels of all sizes are falling, which means that the global LCD panel market is in an overall downward channel, and the situation is relatively unfavorable."

Korean factory or restart shutdown plan

At present, the prices of some LCD TV panels have halved from last year's highs, and some product lines have suffered losses. Industry insiders believe that under the heavy pressure, the two major panel factories in South Korea may put the production shutdown plan on the agenda again.

With the strong rise of domestic panel manufacturers such as BOE and TCL Huaxing, the competition in the LCD industry is very fierce. In recent years, Samsung Display has successively shut down its LCD production lines and turned to display technologies such as OLED and QLED. Samsung Display originally planned to shut down all LCD production lines by the end of 2020, but in order to ensure a full supply of panels under the epidemic and due to the sharp rise in panel prices, it delayed the shutdown plan.

The same is true for LG Display, a major Korean panel maker. The company originally planned to stop production of domestic LCD TV panels in South Korea by the end of 2020, but it is still operating today.

A buyer who has been tracking panels for a long time judged, "Although Samsung Display's shutdown of LCD production lines has little impact on the supply side of the industry, it means that Korean companies have started to lose money again, and prices are still falling, so LG Display It is only a matter of time before the local LCD production line is shut down.”

Coping with destocking pressure

In the past year, domestic LCD panel manufacturers have made a lot of money, and now the pressure is increasing.

Li Yaqin said that the current pressure on panel factories has shifted from insufficient supply of raw materials such as chips to the demand side. The easing of the global epidemic has led to a drop in demand and gradual removal of supply chain risks, which in turn drove brands to start destocking. And this round of destocking is comprehensive, involving TVs, monitors, notebook computers, mobile phones and other consumer electronic products. In addition, in the process, the conflict between Russia and Ukraine and global inflation intensified, and the brand entered the stage of accelerated destocking.

Li Yaqin said that panel makers must make some substantial adjustments to deal with the risk of demand contraction caused by destocking, such as reducing production line utilization. However, brand destocking will not hinder the speed of product upgrades, which are expected to accelerate this year.

Li Yaqin judged, "The profitability of panel makers will be differentiated this year, and some panel makers will face losses. The current situation will test the panel makers' ability to resist risks and demand shrinkage. Factors such as product depth, market strategy, and product line adjustment speed will all Affect profitability.”

It is worth noting that when TCL Technology (000100) recently received a question from investors about whether the industry has adjusted the utilization rate to cope with fluctuations in demand, it said, "The past few years have been a key stage for the transfer of production capacity by country. The market position is rapidly reshuffled, and panel companies have no intention to reduce the utilization rate in order to ensure the scale advantage and market position. After the country transfer is coming to an end and the industry competition pattern is reshaped, the healthy and stable development of the industry is in the interests of all companies. It is expected that in the future Faced with fluctuations in demand, the enterprise side will pursue a balance between scale and efficiency.”