Shaky LCD Panel Supply Could Limit 2021 TV Sales
If you’re looking to purchase a new big-screen television set to help weather the Covid-19 crisis, you might want to consider pushing those plans up before new 2021 models arrive this spring.
That’s because manufacturers of large-format LCD panels used in television sets are now facing possible supply shortages at a time when TV manufacturers are making more aggressive panel orders in anticipation of stronger TV set demand this year and next.
According to market research firm Omdia’s latest market tracker reports, global top 10 TV manufacturers are anticipating a significant growth in consumer TV demand. As a result, Samsung, LG, TCL, Hisense, Skyworth, TPV, Changhong, Sony, Vestel and Konka are looking to purchase 200 million units of LCD TV panels in 2021, occupying 86% of panel makers’ supply, an increase from 70% in 2020 or 64% in 2018.
But the planned closure of South Korean LCD panel fabs and delays in the ramp up of new massive China-based LCD panel factories have wiped out a one-time panel glut.
At the same time, consumer demand for bigger and bigger TV screens is presenting a scenario that, depending on how things shake out, could result in higher-than-expected prices on new model TVs and even TV brand shakeouts in some markets, Omdia reported.
The market research firm reported demand for flat panel displays (FPDs) is set to reach 220 million meters squared in 2020, which represents more than a 4% increase in panel area demand for 2019. In Q3 2020 alone demand has risen by over 12% quarter over quarter.
Yet, delayed startups of new 8.6 and 10.5 Gen LCD fabs in China is resulting in capacity for large area FPD production only growing at a net 2% in 2020. This comes as Korean panel makers are shuttering their domestic LCD factories, reducing capacity of glass sheets produced from Gen 7 and Gen 8.5 TV panel fabs by approximately 19 million meters squared this year, the equivalent of about 31 million 43-inch TVs.
Omdia said multiple new FPD factories in China have suffered from Covid-related travel restrictions preventing foreign engineers from helping with the set-up of key equipment during the first half of 2020. Now in the fourth quarter, production is further being impacted by tight supply of Gen 10.5 glass substrates for some panel makers.
At the same time, consumer demand for larger TV screen sizes has accelerated in 2020 and is expected by the largest TV makers to continue growing after the pandemic, hopefully in 2021.
In 2020 the weighted average LCD TV size will reach 47-inches, up from 45.4-inches in 2019, Omdia said. Covid-19 has also significantly impacted FPD supply and demand in other unexpected ways throughout 2020., such as work-at-home measures resulting in stepped-up demand for tablets, notebooks, and monitors as well as TVs.
“With consumers reducing spending on commuting, eating out, travel, etc., discretionary expenditures are being transferred to home improvements, including consumer electronics purchases,” Omdia reported.
Charles Annis, displays practice leader at Omdia, commented: “Very tight supply in 3Q20 caused panel prices to rapidly rise and should help most leading FPD makers to return to profitability; a very welcome turn of the market as most have suffered consecutive losses since 1Q19.
“Currently we forecast a healthy, balanced market in 2021, where supply and demand area are both expected to grow about 6%. However, many unknowns remain on how Covid-19 will continue to impact demand, and how the improved market might encourage Korean panel makers to delay factory shutdowns and Chinese makers to expand capacity.”
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By Greg Tarr
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