Large-Panel ‘Oversupply’ Expected to Moderate by Q3, Says IHS Markit Report

Though “oversupply” dominates large-display panels, it’s expected to moderate toward a “more balanced” supply-and-demand curve by Q3, said IHS Markit Monday. The current imbalance is causing panel prices to fall, “which is weighing heavily on profitability of panel makers,” said IHS. Large-panel plant capacity has been growing “at a faster rate than demand for more than a year now,” with several Gen 10.5 fabs coming online in China, plus “productivity improvements at legacy factories,” it said. Pricing has “deteriorated continuously” since 2017's second half, it said. “The combination of low prices and growing inventories is finally causing panel makers to lower factory utilization rates.” Some also will close legacy LCD facilities or convert them to OLED lines, while still others “will postpone their planned investment in new facilities,” the researcher said. Delayed investments to 2020 in new panel fabs likely will bring a significant revenue hit to the Applied Materials display business for 2019, said the supplier of deposition systems for LCD and OLED display manufacturing on its Q1 call last month (see 1902150002). Capacity reductions and the shuttering of existing fabs “looks like a harbinger of a growing trend,” said IHS now. “With so much new capacity currently being built out, substantial amounts of uncompetitive legacy production capacity are expected to be taken offline, as the industry works to balance supply and demand.”