LCD price increases are expected to be strong, and panel industry revenue is facing a turning point

Author: China State Grid Source: China State Grid

"2024 will be a turning year for the panel industry from decline to growth." Recently, Li Yaqin, general manager of Qunzhi Consulting, expressed this view in an interview with a reporter from the Securities Times. Data shows that in 2023, the operating income of the panel industry will continue to decline by approximately 7.6%. Li Yaqin predicts that the sales revenue of global panel manufacturers will increase by approximately 11% year-on-year in 2024, reaching approximately US$103.3 billion.

As the panel industry is expected to usher in a turning point, LCD price increases have received widespread attention. The industry has also sent signals that the panel industry is cyclically weakening and is expected to show good growth and profitability in the future. What factors contributed to this shift? Li Yaqin provided three observations: first, the industrial structure and production capacity scale have been reshaped and stabilized; second, the focus of supply-side competition has shifted from scale competition to efficiency competition and profit competition; third, demand has stabilized and is on an upward trend.

However, she also reminded that there are opportunities as well as crises. The crisis lies in the slowdown in LCD panel technology upgrades. Panel manufacturers need to increase technological innovation, especially collaborative technological innovation based on end-side AI needs, to avoid the slowdown in LCD panel technology upgrades and hinder growth. pace. "Promoting the value growth of upstream and downstream collaboration in the industry chain is crucial to the long-term growth of the panel industry."

Industry cycle attributes weaken

The display panel industry is expected to improve, and LCD will benefit first. The reporter noticed that many panel manufacturers have talked about LCD price increases in recent institutional surveys.

According to BOE, in the first quarter of this year, as brand-side procurement demand recovered, LCD TV panel prices rebounded across the board after stabilizing, and accelerated their rise. Entering the second quarter, the hosting of large-scale sports events is expected to further stimulate the recovery in demand for TV panels. In addition, factors such as rising logistics risks and shortages of some upstream raw materials will further increase expectations for LCD TV panel prices to rise. Expectations of high price increases will also further drive rising brand procurement demand, and subsequent LCD TV panel price increases are expected to continue to expand.

BOE believes that looking at the whole year of 2024, after years of market competition in the semiconductor display industry, industry development has gradually matured, concentration has gradually increased, stability has become increasingly obvious, and on-demand production has become the norm. It is expected that LCD TV sales in 2024 The supply and demand situation throughout the year will further move towards a healthy level, and panel prices will gradually return to rationality.

Entering 2024, LCD TV panels will gradually start to increase in price from February to March. Qunzhi Consulting data shows that in March, the prices of 32-inch, 50-inch, 55-inch, 65-inch, and 75-inch TV panels increased by US$1, US$2, US$4, US$5, and US$5 respectively compared with February. Among them, 55-inch, The price increase of large-size panels such as 65-inch and 75-inch has further expanded compared with US$2, US$4, and US$4 in February, and has exceeded the price high in September 2023.

When asked how it views the demand for large-size panels, TCL Technology said that the downstream demand of the panel industry must not only observe the demand, but more importantly, the demand area. The demand area is driven by both the demand and the average size of the product. The global demand area It is expected to maintain stable growth.

Specifically, in the past 10 years, global TV sales have stabilized at around 200 million units per year. While the shipment level has been stable, the cost of large-size panels has dropped rapidly. When upgrading, consumers tend to buy larger TVs with better viewing experience, so there is a strong trend towards larger TV panels. According to third-party data, as of the end of 2023, the average global TV size will be about 50 inches, with broad room for growth. This has also injected long-term and stable growth momentum into the demand side of large-size panels.

BOE also pays attention to the changes in industry cycles. The company pointed out that judging from the current situation, the cyclicality of the panel industry is indeed weakening. In the next three years, the overall growth and profitability of the industry will be good.

In this regard, BOE analyzed three reasons: First, the growth of LCD production capacity will be limited in the next three years, and old foreign production lines and some inefficient high-generation production lines will withdraw from the market; second, the concentration of production lines will further increase; Third, the average size of the TV field, the largest production capacity application, will increase by about 1 inch every year. Although the total shipment volume remains stable, the total shipment area will still increase.

OLED production line profitability improvement

In fact, not only LCD prices are increasing, but OLEDs are also showing signs of price increases. BOE revealed that as the penetration rate of flexible OLED panels in the smartphone field continues to increase, global flexible OLED panel shipments will increase significantly year-on-year in 2023. In terms of price, the prices of some flexible OLED products have begun to rise since the fourth quarter of 2023 and will continue to the first quarter of 2024.

Talking about OLED price changes, Visionox said that in 2023, domestic OLED production capacity will be released at an accelerated pace, and the shipment prices of OLED products for mid- to low-end smartphones will fluctuate violently. According to market conditions, the company adjusts its product strategy, continues to optimize its product structure, and accelerates product development and production capacity release to match mid-to-high-end smartphone models.

Since the fourth quarter of 2023, as the prosperity of the consumer electronics industry has gradually improved, driven by the hot sales of new generation flagship models of mainstream brands and the year-end promotion season, OLED product prices have increased.

Price increases directly affect manufacturers' profitability. BOE stated that the company's flexible AMOLED business will still face greater depreciation pressure in the short term. Coupled with the low prices of some flexible AMOLED products in 2023, the company's flexible AMOLED business has not yet achieved profitability. However, in recent years, the company's flexible AMOLED product shipments have maintained substantial growth, while continuing to work on improving the product structure. In 2023, the profitability of mature flexible AMOLED production lines has improved significantly year-on-year.

Li Yaqin also shared her observations on different display application scenarios. The growth in global smartphone terminal demand in 2024 will drive panel sales to rebound year-on-year. At the same time, as the Apple iPad Pro product line switches to OLED technology, it is expected that tablet computer panels will OLED shipments and revenue will rise significantly.

In terms of notebook computer panels, Li Yaqin predicts that in 2024, driven by brands actively promoting product specification upgrades, the weighted average unit price of notebook computer panels will increase, and this part of the revenue will usher in a rebound. In addition, the scale of display terminals will grow slightly in 2024, and the terminal price war will slow down, and display panel revenue is expected to return to growth throughout the year.

TV panels have the most considerable growth potential. Li Yaqin analyzed that the overall utilization rate of large-size LCD panel production lines in 2023 will be about 79%, which is about 10 percentage points lower than the average annual utilization rate of the industry before the epidemic. "LCD panel manufacturers' on-demand production strategy will continue until 2024. As TV terminal demand stabilizes and OLED TV resumes growth, TV panel revenue is expected to grow by double digits in 2024."

Leading manufacturers return to growth

Judging from the operating conditions in 2023, the revenue of all major manufacturers has declined, but the performance is different.

Among them, Samsung Display’s revenue in 2023 will be approximately US$20.83 billion, a year-on-year decrease of 13%. In the overall business of Samsung Display, Rigid OLED revenue has declined significantly. Among them, due to the high inventory of downstream customers and fierce price competition, the revenue of OLED laptops and tablets have declined to varying degrees. Flexible OLED was affected by the increase in the average unit price of product structure conversion to LTPO, and overall remained stable. QDOLED display and TV business revenue grew against the trend.

BOE will achieve revenue of 174.54 billion yuan, approximately US$20.61 billion, in 2023, a year-on-year decrease of approximately 2%. The revenue scale is on par with Samsung Display. Specifically, against the backdrop of rising demand for smartphones and rising average unit prices, OLED business revenue increased by approximately 23% year-on-year; LCD business revenue fell by approximately 6% year-on-year due to the dual impact of fierce price competition and sluggish demand in the small and medium-sized and IT application markets. %; the LCD TV business benefited from the supplier’s strategy of “controlling production and ensuring prices”, with revenue increasing by approximately 17% year-on-year.

LG Display’s total revenue in 2023 will be US$12.12 billion, a year-on-year decrease of 22%, and its LCD and OLED businesses both experienced double-digit declines. The LCD business is mainly affected by the low utilization rate and low shipments of TVs, and the revenue has fallen sharply; in the IT field, LG Display's product structure is mainly mid-to-high-end, and low-end price competitiveness is weak, which is affected by client inventory adjustments. Demand fell, and revenue from IT applications fell sharply. In the OLED field, smartphones and automotive displays have maintained growth momentum, but the decline of OLED TV has dragged down overall OLED revenue.

Li Yaqin predicts that Samsung Display's revenue will return to growth this year. On the one hand, the penetration rate of OLED smartphone panels continues to increase and price competition slows down; on the other hand, demand for OLED notebook and tablet computer panels will rebound significantly; in addition, QDOLED Business, especially the demand for QDOLED displays, has shown strong growth.

As for BOE, overall revenue will also grow again this year. Li Yaqin analyzed that as the LCD TV market cycle has shifted from a strong cycle to a weak cycle, BOE, as a leading company, will be the first to benefit in terms of revenue and profitability. Competition in IT applications is also showing signs of easing in 2024, which will have a positive effect on boosting revenue and profitability of IT businesses that are mired in price competition. BOE will also benefit from the increased penetration of OLED in the small and medium-sized fields and the slowdown in price competition, and OLED revenue will continue to increase.