With the continuous planning, construction and commissioning of high-end LCD panels in China, the debate over the overcapacity of high-generation LCD panels has never been interrupted. Since the beginning of this year, due to the official mass production of new high-generation lines and the rapid decline in the prices of large-size LCD panels, the performance of LCD panel makers has experienced a year-on-year decline in the first quarter, and the oversupply of large-size LCD panels has further increased.
However, at the 2018 Cross-Strait (Nanjing) New Display Industry Summit Forum recently held, industry experts and LCD panel companies more clearly expressed their belief that “large-size LCD panels are not left over”.
On the one hand, there is the risk of conclusive data and loss. On the one hand, the direction and unlimited possibilities are visible. The debate over whether the production capacity of LCD panel is over-abundance indicates once again that the industry is in crisis and how “far water” solves “near thirst”. "We also need to look at the capabilities of their respective operations.
Overcapacity is in the moment?
The major analysts are pessimistic about the market's predictions. Overcapacity seems to be a foregone conclusion. IHS forecast data shows that with the successive production of new production lines such as the 10.5-generation LCD panel production line and the 6th-generation AMOLED production line, the global panel may experience oversupply from 2018 to 2021, with the greatest risk of excess capacity in 2019. According to Xie Qinyi, senior research director of IHS Markit, the LCD panel will be oversupply in 2018, and panel makers will face greater pressure in the second quarter. In the next 2-3 years, the panel makers will certainly improve through the merger and reorganization or the closure of old lines.
According to Li Yaqin, deputy general manager of Quzhi Consulting, the production line has been continuously increasing and the price of LCD panels has been rapidly declining. It seems that the overcapacity is a foregone conclusion. Taking the price of a 65-inch LCD panel as an example, the maximum price reached 410 US dollars last year, and it has now dropped to 270 US dollars, a decrease of nearly 52%, and the price is still falling. Li Yaqin predicts that large-size LCD panel makers will lose money in the third quarter at the latest.
In fact, LCD panel makers have suffered a performance loss in the first quarter. Although this loss may not be directly caused by the LCD panel business, there are also related factors. A panel industry practitioner pointed out that if panel makers account for the largest proportion of TV panel revenue, once the TV panel business is in deficit, the company may experience a loss. Now mainstream TV panel prices have fallen below the cost price, and there is no sign of recovery, so TV panel makers may experience losses in the second quarter.
Diversified application carrying great future
BOE Hefei 10.5 generation line and CLP Rainbow Xianyang 8.6 generation line have been in volume production in March. The Chengdu Panda 8.6 generation line is expected to be put into mass production in May. This is a result of many analysis agencies oversupplying excess capacity. One of the main reasons for the alarm is that any new production line has a ramp-up process. By the second half of the year, BOE Hefei's 10.5-generation line and China Electronics' two 8.6-generation line will gradually release some of its production capacity. The pressure of loss will be greater.
Guo Zhenlong, general manager of Nanjing Panda's Flat Panel Display Technology Co., Ltd., pointed out in an interview with a reporter from China Electronics News that from a short-term static market, this year's increase in production capacity may seem to bring about the risk of excess capacity, but the TV market is heading for more. The development of large-size directions will drive the increase in the average consumption size of television, and it may digest increased production capacity. In the long run, LCD panel applications are also increasing. New applications such as the Internet of Things and automotive displays will drive demand for LCD panels.
Chen Rengui, senior vice president of BOE, believes that the risk of overcapacity of liquid crystal panels that was discussed three or five years ago and even ten years ago is actually a false proposition. As the panel production capacity increases, the demand is expanding, and the Internet of Things era will stimulate wisdom. The explosive growth of ports is expected to exceed 70 billion smart ports by 2025, and about 60% of them will be display ports. In the IoT era, the display will be ubiquitous. It is understood that while ensuring the competitiveness of the traditional five major application areas, BOE is also continuing to develop automotive, industrial control, medical, white, wearable, VR / AR, electronic whiteboard, splicing, signage, sensing and other sub-sectors.
Andu difficult test operation
If it is said that the diversified applications based on the Internet of Things can absorb more panel production capacity in the long run, the large-size HD video applications at the moment are considered to be the “battle of life” in the operating world.
It is generally believed that the current average consumption size of the TV market is more than 40 inches, and the average consumption size in the future will surely move to 50 and 60 inches. The average TV consumption size will increase by 1 to 2 inches per year, and it will consume an 8.5-generation line.
The holding of international major events will continue to promote the development of high-definition video products worldwide. The 2018 FIFA World Cup in Russia will also boost the sales of HDTVs. In 2020, Japan is preparing to use the 8K radio to welcome the Olympic Games. In 2022, China also hopes to use the Winter Olympics to promote 4K and 8K broadcasting. This is a great opportunity for panel makers. Ouyang Zhongcan, an academician of the Chinese Academy of Sciences, pointed out that CCTV will open a 4K channel. With the successful application of 4K and 8K, thousands of households will need replacements. In this case, “in the future, LCD capacity will double and it will not be surplus.”
Whether it is the immediate replacement of ultra-high-definition or future diversified applications, it is necessary to test the operational capabilities of the company's high-capacity production. Cai Guoxin, general manager of AU Optronics, said in an interview with a reporter from China Electronics News that large-capacity LCD panel industry has already had excess capacity, but AUO’s production line of more than 6 generations has been fully productive, in order to deal with the negative effects of excess capacity. Affected, AUO made some adjustments in technology, products and customers, and shifted its focus to mid-to-high end markets. He appealed that the panel industry should recover the value of products through technological innovation.