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Inventory Adjustments Causing TV and IT Display Shipments to Decline in Q1 2016, IHS Says
3/2/2016 |
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Unit shipment declines in 2015 will continue in the first quarter of this year, due to slowing demand and excess inventory
SANTA CLARA, Calif. (March 1, 2016) - Liquid crystal display (LCD) manufacturer inventory adjustments and continued slowing demand are causing TV and information technology (IT) display prices to fall, further eroding panel makers' profitability. TV and IT display shipments in the first quarter (Q1) of 2016 are expected to decline 8 percent compared to the same period last year, to register just 196 million units. This is the first time since 2009 that panel shipments have declined in the first quarter year over year, according to IHS Inc. (NYSE: IHS), the leading global source of critical information and insight.
Although unit shipments of LCD display also declined last year, shipment area increased thanks to the growing popularity of large-screen TV sets, which sustained the display industry. Large-area TFT LCD shipment area increased by 5 percent in 2015 year over year, while unit shipments declined 4 percent, reaching 694 million units, according to the IHS Large Area Display Market Tracker. "Due to global currency exchange issues and slower demand from emerging markets, global TV display demand in 2015 was lower than initially forecast," said Yoonsung Chung, director of large area display research for IHS Technology.
"TV panel demand in early of 2016 will continue to falter, because of excess panel inventory carried over from last year," said Linda Lin, senior analyst, large displays, IHS Technology. "To control the deficits caused by overproduction of IT and TV panels, panel makers will have to reduce fab utilization early this year, since average selling prices are nearing manufacturing costs."
Notebook PC panel shipments are expected to experience the most serious year-over-year decline, falling 14 percent to reach 40.9 million units in Q1 2016. OLED TV panels will be the only display segment forecast to experience growth in Q1.
The oversupply in LCD TV panels is forecast to continue into the first quarter, according to the latest IHS TV Display Supply Chain Tracker - China. The leading six TV manufacturers in China expect to lower their panel purchasing by 37 percent quarter over quarter and 15 percent year over year. Meanwhile, Samsung Electronics and LG Electronics will slightly reduce panel purchases in Q1.
"Leading display manufacturers have not dramatically reduced fab utilization in the fourth quarter of last year, but the situation will change in the first quarter of 2016, as they will be pressed to reduce the loading," Lin said. "The Chinese New Year holiday, planned fab maintenance and repairs, and the transition to thinner glass will also reduce output. BOE, ChinaStar, CEC-Panda and other leading Chinese manufacturers that are ramping up new Gen8 fabs will have to reduce their capacity utilization in the first quarter to fight declining panel prices and shipments." |
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