The Battle For Next Generation TV Displays
2020 is a transition year for the TV panel industry, says Yole
“The TV panel market was disrupted by the rise of large players in China that increased capacity regardless of demand,” says Eric Virey, principal display technology and market analyst, photonics and sensing at Yole Développement.“In 2019, oversupply sent prices to their lowest levels ever, below cash cost for most players. Thanks to subsidies, lower depreciation, more recent and efficient fabs, BOE and CSOT can control price to eliminate competition. Korean and Taiwanese LCD panel makers turned unprofitable and it became clear that China would soon close the technology gap, leaving no opportunity for differentiation, controlling prices and owning the market. In Q1-2020, Samsung and LG therefore decided to retreat from the LCD TV panel business”.
In the meantime, the COVID-19 pandemic impacted the supply chain and demand in the first half of the year.
Until late 2019, the industry had severe and lasting excess capacity. The tables have now turned, says Yole. Samsung and LG will remove the capacity to produce more than 52 million m2 of panels by 2021, accounting for 18 percent of 2019 global capacity. Meanwhile, Chinese players are adding 42 million m2 worth of capacity. There are now risks of shortages from 2021 and beyond. “This could be exacerbated if Taiwanese makers shut down their least efficient fabs and if China converts some of their LCD lines to OLED rather than proceed with greenfield investments”, comments Virey from Yole. “Conversion typically cuts fab capacity by 50 to 66 percent.
As analysed by Yole's team in the new 'Next Generation TV panel Technology and Market Trends' report, options for the next generation of TV panel technologies keep proliferating. To win the next battle, risky, multi-billion-dollar bets need to be made now. Those choices will decide the fate of Korean panel makers. LG Display got a head start with WOLED. Its new Guangzhou G8.5 fab scheduled for late 2019 was delayed by COVID-19 and yield issues. With WOLED sales below expectation in 2019 and 2020, LG further delayed ramp up until the end of July for fear that depreciation would further harm its financials if it cannot quickly fill its capacity. A G10.5 WOLED fab investment was also pushed back further. In the short term, LG must improve manufacturing efficiency through yields and multi-model glass in order to lower costs and stimulate demand.