© wrangler dreamstime.com Analysis | July 24, 2019
Flat panel demand growth lower than expected
IHS Markit has reduced its 2019 demand growth forecast for flat panel display area shipments by 2.1 percentage points, with the shipment outlook trimmed to 227 million square meters, down from the previous outlook of 232 million.
Area shipments this year are expected to increase by 2.9 percent from 221 million square meters in 2018, compared to the earlier forecast of 5 percent growth. “The flat panel market started the year on a high note, with area shipments beating expectations during the first quarter,” said Ricky Park, director of display research at IHS Markit. “However, this strong performance was due to brands pulling-in orders. Brands accelerated their purchasing due to rising uncertainties over the trade dispute between the U.S and China. As a result, inventory in the supply chain has swelled, making buyers hesitant to purchase more panels, even in anticipation of the hot selling season in the second half of the year.” IHS Markit previously forecasted flat-panel area demand in the first quarter would total 53.5 million square meters. However, demand amounted to 54.3 million square meters. Shipments of displays for applications including LCD TVs, desktop monitors and mobile PCs exceeded expectations in the first quarter as threats mounted over import tariffs. Buyers and sellers hoped to avoid the impact of the tariffs by making purchases before they went into effect. However, both the U.S. and Chinese governments decided to delay increasing the tariffs. Moreover, uncertainties about global economy have grown in the second half of this year. Finally, the inventory has become a burden on the suppliers, and they started reducing volume starting in the middle of the second quarter. With panel demand weakening, prices have begun to deteriorate. IHS Markit forecasts the decreased panel price will be reflected in declining retail prices. This is expected to eventually stimulate end-market demand. As China’s Gen 10.5 fabs stabilize and improve their production yields, demand for super-large-sized products will help drive market growth. As a result, flat-panel demand in 2020 will rise 9 percent from this year, in terms of area. In addition, display demand from the automobile monitor, public display, smart watch and OLED TV markets are expected to grow faster than other applications. The compound annual growth rate (CAGR) from 2017 through 2025 will amount to 7 percent for automobile monitors, 7 percent for public displays, 8 percent for smart watches and 32 percent for OLED TVs. In comparison, the overall flat panel display market’s CAGR will total just 4 percent during the same period.
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