Panel Prices in September – The Good, the Bad, and the Ugly

Panel Prices in September – The Good, the Bad, and the Ugly
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We had been expecting a continuation of weak TV panel prices and a leveling off of panel prices for IT products (monitors and notebooks) for September, and were a bit concerned that our expectation for TV panel pricing (-6.8% m/m) was a bit aggressive.  It turns out that we were correct in our assumptions for IT panels but it seems our estimate for TV panel prices was not aggressive enough.  In fact, the aggregate decline in TV panel prices in September (-19.10%) was the largest single month decline since we have been accumulating TV panel data, which is over 9 years.

The table below gives some perspective on the changes that we have already seen in panel prices, with the high and low prices for each type, the current (September) panel price, and the difference between the panel price peak and nadir vs. the current prices.  As can be seen, Monitors and Notebooks are at peak prices but all other panel types are between 19.7% and 53.7% from their high points since the beginning of 2019.  We note that until August of this year TV panel pricing had been positive m/m since June of last year and has declined from its high in only two months, tablets have seen flat or positive panel pricing since October 2019, while phones have been up and down for some time. The graphic below shows the data in a more visual mode.

With expectations of another very weak month for TV panel prices in October and what are essentially flat IT panel prices, we expect the industry will see another decline in panel revenue in October (see below).  While there have been few panel producers that have not been espousing the validity of their push toward IT panel production in lieu of TV panels, the question remains whether IT panels will follow the same fate as TV panels and when that might happen.  We do note that social effects of COVID-19 have had a far more profound effect on demand for notebooks and monitors, especially given country-wide programs to equip students with laptops during periods of lockdown, and while we expect overall demand for laptops, Chromebooks, and similar mobile devices to remain at a higher level that pre-pandemic, we also expect a decline in IT product demand as we enter 2022.
The only real mitigating factor in that equation is component shortages, which could extend the demand cycle further into 2022, but as some of the larger educational laptop programs wind down at the end of the year, some of those shortages could abate.  In the US, much will depend on the success of bringing students back to classrooms, and whether that scenario plays out without major COVID-19 outbreaks.  We expect an initial spike in COVID-19 among school aged children that might travel to the unvaccinated population, but we expect by early 2022 for that to have run its course to a large degree.  When those numbers start to decline, we expect demand for notebooks and tablets will decline.  That said, we do not expect to see the extreme panel price drop in IT products that has been the case with TV panels, as TV demand has been weakening for months, and while the tipping point was not reached until TV set producers realized that existing set sales targets were unrealistic.  We expect a more gradual weakening of IT panel prices through the 1st quarter of next year.

Aggregate Monitor Panel Pricing & ROC - 2019 - 2021 YTD - Source: SCMR LLC, IHS, Company Data

Aggregate Notebook Panel Pricing & ROC - 2019 - 2021 YTD - Source: SCMR LLC, IHS, Company Data

Aggregate TV Panel Pricing & ROC - 2019 - 2021 YTD - Source: SCMR LLC, IHS, Company Data