Smartphone panel pricing battle in China
Smartphone demand was weak in 1Q, as noted by panel producers in their 1Q results, and smartphone panel pricing declined between 1.5% and 11.1%, which represents a significant change from the last year. Chinese panel producers have been looking to gain share among domestic smartphone brands and have been offering prices for LTPS based smartphone displays that compare to those for standard a-Si based displays, where typically LTPS has garnered a premium price. LTPS backplanes are also used for small panel OLED smartphone displays and discounting has been rumored for some LTPS OLED displays, again by mainland panel producers.
Most Chinese panel producers have exposure to the small panel smartphone market, with Infovision (pvt) having the largest share (8.6%), followed by BOE (200725.CH) with a 5.9% share, and Tianma (000050.CH) with a 3.6% share, while China Star (pvt) and Panda (pvt) having little impact. When compared to top small panel producers such as LG Display (49.2% share), they have a long way to go, and their ability to attract mainland brands is even more important. We are concerned that in cases where demand for a particular display type weakens, as it has in smartphones, price competition will heat up quickly and erase much of the pricing increases seen in the last 12 months. The Chinese smartphone market is more mature than the Chinese IT market, so we would expect such smartphone discounting to gain share to be a bit unusual in the current environment, but it goes to show how quickly the panel pricing picture can change, and how quickly ‘follow the leader’ pricing can become the norm. Demand levels for IT (notebook and monitor) are less of an issue in China, and the Chinese TV market has a life and characteristics that set it apart from other regions, but the risk of panel pricing changes continues to increase, with the smartphone market foretelling how buyer philosophy can change on a dime.
Most Chinese panel producers have exposure to the small panel smartphone market, with Infovision (pvt) having the largest share (8.6%), followed by BOE (200725.CH) with a 5.9% share, and Tianma (000050.CH) with a 3.6% share, while China Star (pvt) and Panda (pvt) having little impact. When compared to top small panel producers such as LG Display (49.2% share), they have a long way to go, and their ability to attract mainland brands is even more important. We are concerned that in cases where demand for a particular display type weakens, as it has in smartphones, price competition will heat up quickly and erase much of the pricing increases seen in the last 12 months. The Chinese smartphone market is more mature than the Chinese IT market, so we would expect such smartphone discounting to gain share to be a bit unusual in the current environment, but it goes to show how quickly the panel pricing picture can change, and how quickly ‘follow the leader’ pricing can become the norm. Demand levels for IT (notebook and monitor) are less of an issue in China, and the Chinese TV market has a life and characteristics that set it apart from other regions, but the risk of panel pricing changes continues to increase, with the smartphone market foretelling how buyer philosophy can change on a dime.
Smartphone Panel Pricing - 12 Months - Source: SCMR LLC, IHS, Witsview
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