Grasp The Trend Of LCD Panel: The Price Will Fall Gradually, And The Profit Of Manufacturers Will Continue

In the first half of 2021, the price increase of LCD panel industry continues. As early as the first quarter, the mainstream size of TV panel has increased by more than 50%, and some of them even doubled. The momentum of the second quarter has not decreased. At present, the panel market presents a complex relationship between supply and demand. The influencing factors include the decline in demand for low-end electronic equipment, the rise in hardware costs, and the shortage of components after the relief of the epidemic. The trend of panel price in the second half of the year has also become the focus of attention.

"We believe that a substantial price decline is hard to see in the second half of this year at the current time point." Li Yaqin, general manager of sigmaitell, told the 21st century economic reporter that, on the one hand, after the epidemic is relieved, the stimulating fiscal policies of European and American countries will not be weakened, such as encouraging investment and enterprises to expand production. With the increase of wages and purchasing power, the demand will gradually and slowly return to normal level from the explosive growth caused by the current epidemic situation; On the other hand, with mobile office becoming the norm, notebook, PC and other mobile products will have strong demand. For example, notebooks have been out of stock since 2020.

In her opinion, "2020 is the peak of demand, especially for PC products and TV products. In terms of PC categories, from consumer research, it is found that three to five years is a replacement cycle, especially in the education and commercial markets, which are products with strong demand. In the long run, the demand for the whole display panel is a gradual regression, and the overall display panel price shows a relatively natural decline, rather than a substantial decline. "

Fourth quarter price callback drives IC supply still tight

TV is the main application of LCD panel. Many people in the industry believe that the price of LCD TV panel will remain at a high level in the third quarter, which will gradually become stable, and there will also be structural rise.

Zhang Hong, research director of group intelligence TV business unit, told the 21st century economic report: "in the third quarter, because the global, especially the head brands, carried out panel stocking for" Black Friday ", the demand for panel stock by international brands remained strong. Based on this, the supply and demand judgment of global LCD (LCD) TV panel Market in the third quarter was gradually balanced, It will also drive the panel prices to gradually stabilize in the third quarter. In the fourth quarter, manufacturers gradually completed the panel stocking in peak season, and the demand for stock up will gradually weaken. At the same time, due to the gradual recovery of supply capacity from the supply side, it is expected that under the impact of two factors, the risk of oversupply in the overall LCD TV panel market in the fourth quarter will increase, and the panel price will usher in a downward trend in the fourth quarter. "

Specifically, from the demand side, after the epidemic eased, some demand has indeed declined in the second quarter, and the TV market sales are also going down“ In 2020, the total TV shipment scale in China market has dropped below 50 million units to 46.9 million units, a decrease of 10.1% year-on-year. This year, it is estimated that the number of TV shipments will still maintain a decline of nearly 10% year-on-year. Affected by the rigid demand and the weakening of consumption, it is difficult for China's market to return to the scale of more than 50 million TV sets in a relatively long time in the future. " Zhang Hong said.

However, it is worth noting that although TV sales are not good, the average size growth is rapid, which has led to a substantial increase in panel shipping area.

From the supply side of the panel, Zhang Hong said that at present, the global investment in the new line of high-generation LCD panel has slowed down, but panel manufacturers, especially the head panel manufacturers, are very active in the capacity expansion of existing production lines, especially in Huike's capacity expansion in the 8.6 generation line, BOE and Huaxing optoelectronics for the 10.5 generation line, driven by the active capacity expansion, According to the simulation data of group intelligence consulting, we can see that the actual supply area of global LCD TV panel maintains an obvious growth trend. In 2021, the global LCD TV panel capacity supply area increases by 8.6% year-on-year, and it is estimated that the supply capacity area in 2022 will increase by 12.1% year-on-year, and the overall capacity growth rate will still maintain a relatively high growth trend.

In addition, the lack of upstream chip capacity is also affecting the panel supply. Li Yaqin told reporters: "the supply of driving IC is still tight. In the first half of the year, it and TV are affected to varying degrees. The impact of the display market is close to 7%, and TV is 4% to 5%. LCD shares production capacity with many components, such as power management chip, vehicle power management chip, etc. Therefore, the shortage of 8-inch chips will not be alleviated systematically this year or even next year. At present, 12 inch mature processes are starting to make LCD driver IC. We think that 12 inch capacity release is an important observation for LCD driver IC. "

The periodicity of liquid crystal panel is weakened

Behind the price fluctuation of LCD panel, the pattern and logic of the industry are changing.

On the one hand, the overall panel display industry is in a new growth period. Liu Xiaodong, President of BOE, pointed out at the 2021 world display conference that from 2015 to 2020, the global display industry will be in a stable growth period, with a compound annual growth rate of 2% in shipment. It is estimated that from 2021, the global display industry will enter the next rapid growth period, and the compound annual growth rate of shipment can reach 7%, in which the growth of innovative applications accounts for 76%.

On the other hand, in the field of liquid crystal, the head effect of panel manufacturers is more and more obvious, and the panel production area is continuously gathering to the head panel manufacturers. According to Zhang Hong, in 2021, BOE, csot and Huike will account for more than 50% of the total production area of LCD TV panels. By 2023, the top three panel manufacturers will account for nearly 70% of the total production area of LCD TV panels, of which BOE will gradually approach 30%, and the capacity concentration of global LCD TV panel manufacturers will continue to increase, Gradually forming a "one super and many strong" competition pattern.

With the industry structure becoming more and more stable and the growth of LCD production capacity slows down, the LCD industry may enter a new growth stage. According to the report of galaxy securities, the compound growth rate of LCD production capacity in the next three years will be 3.1%; The compound growth rate of LCD demand side is about 6.5%, the supply and demand pattern of the industry will be improved, the periodicity will be weakened, the panel price will be maintained in a reasonable range, and the profitability of LCD panel manufacturers will be greatly improved.

In the cold winter of overcapacity in the past few years, and now the price rising boom cycle, the panel manufacturers have achieved a substantial increase in profits this year. Next, is this growth sustainable?

Zhang Hong said: "combined with the gradual weakening of demand, there will not be a very obvious decline. At the same time, based on the competitive pattern of one super multi strong panel Market and the further increase of capacity concentration, we believe that LCD panel manufacturers will maintain a good profit state for a long time."

Although TV sales continued to decline, the sales area was growing and the technology was iterative, which made up for the new demand; At the same time, the flat panel and display fields of PC market, as well as the vehicle market, are still growing; In addition, the panel manufacturers themselves are adjusting their strategies. How to improve the added value of products and diversify the income structure are important issues.

Li Yaqin also told reporters: "after a big wave of price competition in 2018 and 2019, panel manufacturers are very active in adjusting. The biggest adjustment is to seize the strong demand of it in the epidemic situation to substantially reduce the 8.5 generation line, including the 8.6 generation online TV production capacity. The main TV panel factory has reduced the 8.5 and 8.6 generation line TV by at least 40% and 50%. Now panel manufacturers have a strong sense of crisis in the future. Fierce price competition in 2018 and 2019 hurt the profits of the entire industry chain. At that time, the whole machine brand did not get more profits. Now the panel factory is constantly thinking about making more adjustments, such as further reducing some TVs in the existing system, and allocating as many other applications as possible in the limited IC resource allocation. With the increasing concentration of manufacturers, panel manufacturers should think more rationally and create more value for the future industry. "

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