August Panel Shipments – “The Lady Doth Protest Too Much”
Based on the dire headlines in the display trade press, focused on massive utilization cuts at LCD panel producers, we were expecting very depressing results from producers in August. “Lowest utilization levels in history”, and similar stories set the tone for disastrous shipment numbers for panel producers in August and we played along mentally preparing for the worst. As it turns out both from a sales standpoint and a shipment standpoint, August was not nearly as catastrophic as we thought, with large panel combined shipments declining only 1.3% m/m although down 18.1% y/y. August large panel LCD sales declined 5.7%, while prices dropped 5.2% for the month, which indicates that the impact of the shipment decline was partially offset by an improvement in mix ASP.
The shipment breakdown in terms of application was even more antithetical to industry chatter, with TV shipments up 7.6% m/m and now up 7.1% y/y, the only major panel category that is above last year’s shipment levels. While the peak and subsequent decline in TV panel prices happened earlier than the cycle with IT panels (monitors, notebooks, and tablets), much of the recent industry chatter concerning utilization cuts was focused on Gen 8 fabs, the mainstay for the production of TV panels, and while IT panels can also be produced on Gen 8 lines, the focus on utilization cuts at Gen 8 fabs would have tilted TV shipments more toward lower shipment levels.
Notebook shipments declined 10.1% m/m and 41.9% y/y and as monitor panel shipments did not peak until December of last year, the y/y comparisons will likely remain weak and while monitor shipments are certainly below any month in 2021 they are still above the lows of 2020 when the pandemic began. Monitor shipments declined 8.4% m/m and declined 25.3% y/y in August, while tablet shipments increased by 2.5% m/m and declined 3.1% y/y, seeming to hold shipment levels relatively consistent this year. On a regional basis, while South Korean producers saw the biggest shipment decline m/m in August in terms of revenue (-8.2%), it is hard to disaggregate both Samsung Display’s (pvt) and LG Display’s (LPL) large panel capacity reduction plans from the effect of utilization cuts. Taiwan saw a 6.7% reduction in panel revenue, a bit more in line with the industry m/m revenue decline of 5.7%, while Chinese producers, where much of the utilization attention has been focused, saw a 4.0% revenue reduction m/m. On a y/y basis Taiwan was down 55.9%, Korea down 9.8%, Japan down 22.1% and China down37.6% against the combined industry sales being down 37.0%. For reference, the only panel producer that had a positive m/m sales ROC was HKC (+13.1%), although still down 11.4% y/y. Samsung Display also had a positive August sales ROC but it is likely only from large panel lines that are in the wind-down process and represents only 0.19% of industry large panel LCD sales.
IT panel shipments did decline in August, some of which we attribute to utilization cuts, but we are even more suspect about the extent of the utilization cuts made at panel producers in August than we were before, given the better shipment results for TV panels. We expect that much of the doom and gloom came from panel producers themselves who embellished the utilization cuts a bit to create an atmosphere where panel buyers might be concerned that they would be unable to secure even the reduced quotas they would need for August and September. While this sounds quite cynical, it would not be the first time such a strategy was employed. If our cynicism proves correct in September it leads us to see a longer cyclical downturn for the industry than if panel producers really made the very deep cuts across all company fabs that were hinted last month. Hopefully that is not the case as we had anticipated that panel producers would really bite the bullet in August to tighten the overall LCD large panel market, but it looks like that was not the case.
The shipment breakdown in terms of application was even more antithetical to industry chatter, with TV shipments up 7.6% m/m and now up 7.1% y/y, the only major panel category that is above last year’s shipment levels. While the peak and subsequent decline in TV panel prices happened earlier than the cycle with IT panels (monitors, notebooks, and tablets), much of the recent industry chatter concerning utilization cuts was focused on Gen 8 fabs, the mainstay for the production of TV panels, and while IT panels can also be produced on Gen 8 lines, the focus on utilization cuts at Gen 8 fabs would have tilted TV shipments more toward lower shipment levels.
Notebook shipments declined 10.1% m/m and 41.9% y/y and as monitor panel shipments did not peak until December of last year, the y/y comparisons will likely remain weak and while monitor shipments are certainly below any month in 2021 they are still above the lows of 2020 when the pandemic began. Monitor shipments declined 8.4% m/m and declined 25.3% y/y in August, while tablet shipments increased by 2.5% m/m and declined 3.1% y/y, seeming to hold shipment levels relatively consistent this year. On a regional basis, while South Korean producers saw the biggest shipment decline m/m in August in terms of revenue (-8.2%), it is hard to disaggregate both Samsung Display’s (pvt) and LG Display’s (LPL) large panel capacity reduction plans from the effect of utilization cuts. Taiwan saw a 6.7% reduction in panel revenue, a bit more in line with the industry m/m revenue decline of 5.7%, while Chinese producers, where much of the utilization attention has been focused, saw a 4.0% revenue reduction m/m. On a y/y basis Taiwan was down 55.9%, Korea down 9.8%, Japan down 22.1% and China down37.6% against the combined industry sales being down 37.0%. For reference, the only panel producer that had a positive m/m sales ROC was HKC (+13.1%), although still down 11.4% y/y. Samsung Display also had a positive August sales ROC but it is likely only from large panel lines that are in the wind-down process and represents only 0.19% of industry large panel LCD sales.
IT panel shipments did decline in August, some of which we attribute to utilization cuts, but we are even more suspect about the extent of the utilization cuts made at panel producers in August than we were before, given the better shipment results for TV panels. We expect that much of the doom and gloom came from panel producers themselves who embellished the utilization cuts a bit to create an atmosphere where panel buyers might be concerned that they would be unable to secure even the reduced quotas they would need for August and September. While this sounds quite cynical, it would not be the first time such a strategy was employed. If our cynicism proves correct in September it leads us to see a longer cyclical downturn for the industry than if panel producers really made the very deep cuts across all company fabs that were hinted last month. Hopefully that is not the case as we had anticipated that panel producers would really bite the bullet in August to tighten the overall LCD large panel market, but it looks like that was not the case.
Large Panel LCD Display Shipments - 2020 - 2022 YTD - Source SCMR LLC, OMDIA, Witsview, RUNTO, Company Data:
TV Panel Shipments - 2019 - 2022 YTD - Source: SCMR LLC, IHS, Witsview, Company Data
Notebook Panel Shipments - 2019 - 2022 YTD - Source: SCMR LLC, IHS, Witsview, Company Data
Monitor Panel Shipments - 2019 - 2022 YTD- Source: SCMR LLC, IHS, Witsview, Company Data
Tablet Panel Shipments - 2019 - 2022 YTD - Source: SCMR LLC, IHS, Witsview, Company Data
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