LCD panel industry chain development trend next year

In early 2014, DisplaySearch forecasted that the growth rate of TFT LCD panel demand in 2014 was 7%, and the growth rate of production capacity was 4%. In the latest forecast, the growth rate of TFT LCD panel demand in 2014 is estimated to be 7.6% based on area. In terms of panel prices, after entering 2014, 32-inch and 40-inch and 42-inch prices have risen, but the overall price has remained stable.

From the beginning of the year to the second quarter, it was common practice for brand companies and circulation channels to adjust their inventory. International television major brands purchased a large number of TV panels. Therefore, they were initially worried that “supply may be oversupply”. But as time goes by, the worry about inventory disappears. The supply of notebooks and monitors even faced tight supply. In addition to the panel for tablet PCs, supply and demand remained largely balanced in 2014.

At present, the demand for TFT LCD panels has a higher growth rate by area, which is in a balance between supply and demand. DisplaySearch predicts that this status will continue to be maintained in 2015. It is estimated that the growth rate of TFT LCD panel supply area in 2015 will be approximately 6%. Although it is lower than 7.6% in 2014, it has been considered as a relatively high growth rate as a mature industry.

The production capacity of glass, polarizers, and driver ICs has not increased.

Since the growth rate of the forecasted supply area is stable, generally speaking, the same forecast is made for the growth rate of panel components. However, there were signs of tight or insufficient supply of panel components in 2015. Because the main manufacturers of glass, polarizers, and driver ICs have not basically expanded their production capacity.

The situation that glass production capacity has lagged behind TFT LCD panels will continue in 2015. In addition, the demand for thin-sheet glass has grown. Some panel makers require the use of 0.25-mm glass to produce panels for high-end IT products.

In theory, if the glass is thin, the cost will be reduced and the benefit will be improved. However, due to the low yield and quality problems, it has fallen into a state of reduced production capacity. Moreover, some glass manufacturers have difficulty in producing glass with a thickness of 0.4 mm or less. Glass manufacturers have not substantially increased production capacity in recent years. In addition, Chinese glass manufacturers have just started production. Therefore, in 2015, there may be tight or insufficient supply of glass.

Similarly, the polarizer industry has not basically expanded its capacity recently. Among the top three polarizer manufacturers, only South Korea's LG Chemical has expanded its production capacity. We speculate that the major polarizer manufacturers are all operating at full capacity and there is basically no room for production increase.

The demand for driver ICs also continues to grow with the increasing sophistication of the panel. However, driver ICs mainly use low-return 200mm wafers, so chip makers prefer to produce other products. It does not seem to be intended to invest in expanding the production capacity of the driver ICs.

Large parts manufacturers predict that the supply and demand situation will become tight in the future. This kind of forecast may promote investment in expanding production capacity, but manufacturers may doubt whether “the current status is long-term or short-term”. The tight supply of spare parts will also be affected by the panel maker's 2015 plan. The possibility of a growth rate of TFT LCD panel supply area of ​​less than 6% in 2015 is very low. The response of the parts and components industry may affect the TFT LCD panel industry in 2015.