Display Market Does About-Face, as IHS Forecasts Tight Supplies Through 2017

The oversupplied display market of Q1 has corrected itself and is now trending toward “surprising tightness” in second-half 2016, said an IHS report Tuesday. Because of seasonally weak demand and the ramping of new capacity in China, flat-panel display (FPD) supply outpaced demand by 20 percent in Q1, the largest glut since early 2012, IHS said. After “rapidly” correcting itself in Q2, supply is expected to tighten further next year, it said. Falling panel prices late last year and early this year drove consumers to buy larger TVs, while notebook and monitor demand began to stabilize, said IHS. Capacity growth is restricted as manufacturers adopted “new and more complicated processes” in some factories and closed others that are less productive, it said. “South Korean panel makers are being particularly aggressive in shutting down older LCD fabs, including Gen 5 and even Gen 7 facilities,” said analyst Charles Annis. A South Korean seventh-generation facility scheduled to be taken off-line later this year accounts for nearly 4 percent of capacity designated for large-area production and will be the largest factory shutdown in the history of FPD manufacturing, Annis said. Demand for large-area FPD applications is expected to grow 5-6 percent per year through 2018 while capacity is expected to increase by only 1 percent next year and 5 percent in 2018, said IHS. By the second half of 2018, additional capacity brought on by Chinese producers -- including the first gen 10.5 factory -- is expected to nudge FPD supply back toward “looseness,” said Annis. “Historically, the FPD market has corrected itself by reducing factory utilization and delaying capacity expansion plans.” But the rise of Chinese FPD manufacturing has altered the pattern, pushing manufacturers in other regions “to rationalize their current production assets at unprecedented and unexpected rates,” he said.