Jabil's Global Mechanicals Intelligence Archive

Global Mechanicals Intelligence

Q2 2024 | APRIL- JUNE

MARKET OVERVIEW

• The fate of the display panel industry in 2024 depends on three factors: sports events, AI PCs, and industry production adjustments. Together, these will affect the panel industry's recovery momentum. 
• An oversupply of mobile phone displays compared with the actual demand for handsets led to excess display inventory by the end of 2023. 
• In 2024, the yearly small and medium display shipments are expected to decline by 4% year-on-year (YoY) to 2.37 billion units because of the oversupply in 2023. 
• Although the display industry leaders are investing in and expanding the production of OLED panels, James Yang, Innolux president and COO, said OLED is essentially a derivative of LCD technology. LCD is expected to continue to dominate the display segment, with nearly 90% of the market by at least 2030. 
• AUO is accelerating its efforts in Micro LED technology to secure a leading position in the next-generation display market. The company anticipates its automotive products entering mass production between 2026 and 2027. 
• Some suppliers set up factories in multiple regions to avoid trade barriers. 
• There is likely a forthcoming consolidation phase for Chinese LCD plants. Chinese LCD giants BOE and CSOT will control 50% of the market share by 2026.  

DEMAND COMMENTARY

• According to industry sources, a moderate recovery in demand for commercial monitors is anticipated to result in a marginal increase in the global market for monitor panels in 2024.
• Some customers, especially those in the medical category, still request partial delivery reductions. Orders are even canceled in the European market. There are some signs of recovery in the consumer sector, and there is a slight return of orders in the medical industry. 
• Some consumers use low-end models for cost-saving purposes, like changing color displays to LED segments or selecting mono-LCD instead of TFT color.
• A report suggested that Micro LED touted as the next-generation display technology, will soon achieve modest penetration in the smartphone market.
• Micro LED shined at CES 2024.  A face-off against OLED is likely to occur by 2026.

SUPPLY COMMENTARY

• Samsung sees OLED microdisplays as the solution for next-generation VR headsets, such as Apple’s Vision Pro (it uses 1.4” 4K OLED microdisplays made by Sony). At the same time, micro-LEDs will power the more demanding AR applications. Samsung Display is looking to bring OLED microdisplays to the market soon – initial production will begin next year, and full mass production will be achieved in 2026. Micro LEDs will take longer to reach the market.
• Display fab utilization dropped to 68% in the first quarter of 2024. Reduced demand early in the year, combined with many carried-over inventories, has caused LCD TV display buyers to predict that display prices will continue to fall until inventory is cleared. 2024 new model demand can help recovery, at least until the end of the first quarter. However, Chinese panel makers, who dominate the LCD TV display supply market, believe they can halt price erosion quicker than the industry anticipates, according to Omdia.
• China's upcoming mobile OLED dominance: market share soars past 40%, set to eclipse South Korea by 2025
• Taiwan-based Innolux, a technology partner with India-based Vedanta on TFT-LCD panels, said its collaboration with Vedanta will begin mass production of display panels in two years after approval and is likely to break even two years after operation.
• Major suppliers’ lead times remained stable and flexible to support upside demand: 
  • BOE:  17~22 weeks
  • TIANMA:  15~18 weeks; LVHM has shortened to 22 weeks from 28.
  • Giant: 15 weeks.
  • Truly:  10~16 weeks.

PRICING SITUATION

• Some panels' tight supply situation has been alleviated. However, there is no clear sign of price changes yet in mobile panels.
• Due to the slowdown in demand, tight LCD production capacity will not cause delivery issues. The shortage of flexible AMOLED panels is not decreasing, and the main production lines in China are expected to continue to have tight supply.
• Regarding a-Si, the Guangzhou G8.6 production line of CSOT and the Mianyang G8.6 production line of HKC are new forces in the a-Si mobile phone panel market, with continuous production capacity and some brand-new projects about to be mass-produced. The tight supply situation will continue to improve.
• Regarding AMOLED, Samsung Display (SDC), the main manufacturer of rigid AMOLED panels, is currently communicating with multiple Chinese phone manufacturers regarding price increases. The domestic main flexible AMOLED panel production line is facing supply shortages due to module capacity bottlenecks, and there are situations where delivery cannot meet demand. This situation may continue.
• Taiwan DDI makers weigh China outsourcing for cost competitiveness as price reduction pressure remains.

KEY TAKEAWAYS

• Demand for small and medium displays remains uncertain. Small and medium display makers should take a cautious view of the small and medium display market in 2024.
• The market information provides mixed insights into the display market. It suggests that LCD TV panel prices are expected to stabilize and rebound earlier than anticipated despite tensions between panel makers and TV makers. For the small to medium display market, a cautious outlook is recommended for display makers. Specifically, shipments of smartwatch displays are forecast to reach 365 million units in 2024, with a 7% YoY growth, which a-Si TFT LCDs will mostly drive for low-priced, non-branded smartwatches.
• Price: The prices are expected to increase in the 2H24 for LCD TV and AMOLE potentially. Other categories will be unchanged in the short-term.
• Demand: Small and medium display shipments are expected to recover, with a particular contribution from mobile phone displays, which are forecast to grow steadily by 7% Year over Year (YoY).
• Supply: The market information indicates a shift in the market share of mobile OLED displays, with China's market share soaring past 40% and being set to surpass South Korea by 2025. This suggests a significant change in the supply dynamics of mobile OLED panels.