Category: - Supply Chain Market Research - SCMR LLC

Supply Chain Market Research - SCMR LLC

Flatland

5/27/2025

Flatland

Large panel pricing was flat for the May period, and we expect June to be similar.
May was, to put it simply, very quiet. We expected little price movement and that is what we got, and we don’t expect that to change in June unless there is another tariff judgement day. July will be a key month as there will be much resting on whether deals have been made or whether tariffs will be put back in place. While we see neither side having as much leverage as they might have thought earlier, we do expect brand pull-ins to be less aggressive this time around. That said, we expect little substantive progress is being made, regardless of the positive spin likely from the White House in June and while deals might calm nervous investors, consumers are still skeptical that any of these trade shenanigans will make much of a difference this year, making the real driving force for the upcoming holiday season consumer sentiment rather than tariffs, unless Trump ius willing to go all in and put his reciprocal tariffs back in the game and take a chance with the electorate.

Figure 3 - Aggregate Total LCD Large Panel Pricing - 2018 - 2025 YTD - Source: SCMR LLC, OMDIA, Witsview, RUNTO, Company Data

Up on the Tightrope

5/27/2025

Up on the Tightrope

April large panel display shipments were down 11.0% m/m but still up 4.4% y/y and up 10.8% on a cumulative y/y basis. April large panel sales were down 11.8% m/m and down 9.1% y/y and up 1.0% on a cumulative y/y basis. Sales were down in every region m/m with Korea seeing the largest decline (↓28.5% m/m) and Taiwan seeing the least (↓3.4% m/m).
The unusual tariff circumstances that have been the case since the installment of the current Trump administration, have made it a difficult year for panel producers and the CE space in general. Not so much for the sale of panels, but for trying to predict consumer demand patterns. With each EO from the White House, producers and brands have struggled to find a way to understand true consumer demand, exclusive of those buying in front of expected tariff impositions. Thus far we have yet to speak with any distributor, retailer, or component supplier that says they have a realistic plan or a way to decipher Trump’s trade policies, but in typical style, brands have been taking the initiative and have been pulling in orders to try to beat what are very ‘fickle’ tariff deadlines.
Brands, anticipating a slew of ‘reciprocal’ tariffs on a broad number of countries and the 100%+ tariffs imposed on China, pulled-in forward month orders before the imposed April deadline, although they found that most tariffs threats were rescinded or postponed only days after the deadlines were met. Both Figure 1 and Figure 2 (Large Panel Shipments and Sales) show such peaks in March as brands pulled in 2Q shipments to make sure they had sufficient pre-tariff inventory in the US. With both worldwide reciprocal tariffs and those specific to China postponed until early July, the pressure was off brands, and they were able to resume somewhat normal purchasing `levels. Below we show the first four months of the year and how large panel shipments compare with the 5 year averages. April sees a return to those averages as tariff talks continue with an early July deadline.
We expect that as the early July deadline approaches, something similar to February/March will occur again, but a bit less so as inventory levels remain high at least for now. Should the White House rattle sabers again in July and then postpone, we expect brands will begin to pay a bit less deference to the fear of higher cost product from additional tariffs and will try to maintain more reasonable inventory levels in the US. You can only make threats a few times before you have to prove that they mean something and the effect on the US consumer is going to make those threats a bit of a balancing act for the administration as was quickly discovered last month. Walking the tightrope….

Figure 1 - Large Panel Shipments - 2019 - 2025 YTD - Source: SCMR LLC, OMDIA, Witsview, RUNTO, Company Data

Figure 2 - Large Panel Industry Sales - 2019 - 2025 YTD - Source: SCMR LLC, OMDIA, Witsview, RUNTO, Company Data

Proof of Concept

5/16/2025

Proof of Concept

Ink-jet printing for displays has come and gone a number of times. As far back as the 1990’s programs to adapt the technology to the display space had begun and companies like Kateeva (pvt), Tokyo Electron (8035.JP), and SEMES (pvt) were developing systems using IJP for display. At times there has been great hope for the technology, originally as a way to reduce emitter material costs and later as a tool for the encapsulation of OLED materials, but in only a few instances has IJP proved to be an effective competitor against more standard metal mask vacuum deposition systems. IJP does seem to have found a home at Samsung Display (pvt) where it is used to encapsulated OLED materials and to deposit quantum dot materials on SDC’s QD/OLED displays, but few producers have been successful enough with the technology to use it as a primary sub-pixel deposition system. In fact, the leader in the development of IJP technology for OLED, JOLED (defunct) went bankrupt in 2023 and sold its Gen 5.5 IJP line to Chinastar (pvt).
Chinastar has been using the equipment to produce what is the first (and only?) commercial IJP display product, a 21.6” display for the medical industry. Most recently Chinastar has shown both small (6.5”) and larger (14”) IJP displays and is now expected to begin offering 14” and 16” IJP notebook panels sometime in 1H 2026. Chinastar’s IJP line is rather small but given the relatively small size of the current display, the line has a maximum production level of 240,000 units/month (100% yield), likely far in excess of what Chinastar is able to sell, so capacity is not a current issue. That said, panel producers must look years into the future to decide whether to build out capacity and Chinastar is considering building a Gen 8.5 ink-jet fab to fill future demand.
There would be two key advantages to such a project. First, the Gen 5.5 fab currently being used (21.6” product) is rather inefficient, wasting 23% of the substrate with each production sheet. A Gen 8.5 IJP fab would bring that substrate efficiency up to ~93%, a substantial savings during high volume production. The Gen 5.5 fab can produce a maximum of ~240,000 21.6” displays each month (theoretical), while the Gen 8.5 IJP fab could produce ~800,000, so if Chinastar believes that IJP is enough of a differentiator to attract high volume customers, the Gen 8.6 fab would be needed.
It’s a tough decision given the importance of not only reducing the cost of production, but also exceeding the specs of competitive displays produced on more traditional deposition systems. If IJP is only an advantage for the producer, it’s a much harder sell than if it benefits both the producer and the customer, so there is still a lot for Chinastar to prove before they get enough customer feedback to justify spending a few billion on a new IJP fab.

Sharp Shrinks

5/14/2025

Sharp Shrinks

Sharp (6753.JP), once the shing star of Japan’s LCD TV display panel business is selling its Kameyama #2 LCD fab to its parent Foxconn (2354.TT). The fab, which originally produced TV panels, has been producing small displays for laptops, tablets, and smartphones of late. Foxconn has not indicated what they will do with the plant when the deal closes (expected by August 2026), but in the interim the fab will continue to operate under Sharp’s control. Given that Foxconn is Sharp’s largest shareholder, this might be a case where the sale is being made to dress up Sharp’s profitability, with the losses from the fab easier to absorb at Foxconn.
When the sale is completed, Sharp will have two remaining Gen 6 fabs (Hakusan and Kameyama #1) and one Gen 4.5 fab (Mie #3). The Mie #3 fab has been running at ~50% of its stated capacity, with Sharp expecting to more than double display revenue from that fab by fiscal 2026. While it is difficult to pin down, given the rapidly changing CE market, we expect much of Sharp’s remaining LCD capacity will be oriented toward the automotive display and XR display markets, with larger panels being produced at Kameyama #1. Sharp is targeting an increase in the production of panels over 13” at Kameyama #1 from ~30% now to 55% by fiscal 2027.
It would seem that with the sale of Kameyama #2, Sharp has trimmed its display business down to a more manageable level, although relying on continued growth in automotive displays. As Sharp is considered one of the most recognizable brands in the CE space, they continue to produce their own TV set branded product, which they can still produce, after the sale, maintaining in-house display production. Unfortunately Sharp does not produce OLED displays commercially, so we expect Sharp’s OLED TV models are based on LG Display’s (LPL) WOLED panels not on Sharp’s own OLED production. Hopefully a smaller, more profitable Sharp will be the result of the Kameyama #2 sale…

April in Taiwan

5/9/2025

April in Taiwan

The three panel producers in Taiwan, given the fact that they are required to report monthly sales, tend to be a precursor to general display industry trends, and as such we track sales data for all three. On a general basis AU Optronics (2409.TT) and Innolux (3481.TT) are oriented toward large panel production while Hannstar (6116.TT) is oriented toward small panel production, although all three do both. In April the general trend was for relatively flat sales m/m, although AUO saw m/m sales decline by 10.5% after a strong March.
While each of the three producers have their own sales patterns, the general trend last year was for a weak 1Q and progressive improvement through September. This will make y/y comparisons more difficult going forward this year, which have already turned negative for both large panel producers. As we have noted, there has been some non-linearity this year as CE brands pull in orders to move product into the US to avoid potential tariffs, which we expect will continue until the next ‘tariff deadline’ in early July. Inventory levels in many CE products remain high for the same reason, which could affect production later in the year if there is no incremental demand as the holiday season unfolds in September.

Figure 1 - AU Optronics - Monthly Sales - 2018 - 2025 YTD - Source: SCMR LLC, Company Data

Figure 2 - Innolux - Monthly Sales - 2018 - 2025 YTD - Source: SCMR LLC, Company Data

Figure 3 - Hannstar Monthly Sales - 2018 - 2025 YTD - Source: SCMR LLC, Company Data

Mending Fences?

4/28/2025

Mending Fences?

Samsung Electronics (005930.KS) and BOE (200725.CH) are rivals, not quite directly but Samsung Electronics’ affiliate Samsung Display (pvt) competes head-to-head with BOE in the small panel display market and to a lesser degree in the large panel TV space. As we have noted, Samsung Display has been at loggerheads with BOE over IP issues and after a recent partial win concerning BOE’s misuse of Samsung trade secrets and IP, Samsung Display continues to fight BOE in the courts. That said, Samsung Electronics also has issues with BOE. As the largest TV set producer, Samsung Electronics, requires that those who use “We supply to Samsung Electronics” in their advertising, pay a royalty. In 2022 BOE, who was the second largest supplier of TV panels to Samsung in 2021, refused to pay and Samsung has reduced BOE’s share as a TV panel supplier considerably since that time as they continued to battle over the royalty situation.
It seems that the President of Samsung Electronics TV division is scheduled to visit China in the middle of May, and BOE officials are expected to visit Samsung in Korea, with both expected to try to negotiate an agreement between the two on both panel prices and royalties. The idea is that BOE can either lower panel prices to compensate Samsung or can leave panel prices the same and pay the royalty.
While this seems reasonable, it might not be to BOE, who is also a major supplier to LG Display (LPL), Samsung’s local rival. LGD has recently sold it’s last LCD TV panel plant (Guangzhou, China) to Chinastar (pvt), also a supplier to both Samsung and LG (066570.KS). The large panel product that was being purchased from the LGD Guangzhou fab before the sale, would now become purchases from Chinastar. Samsung has an internal requirement that no supplier of key materials can represent more than 30% share, and that means that it will have to maintain that 30% restriction, keeping it from purchasing panels from the Guangzhou fab now under the Chinastar banner. While there are other large panel producers, such as AUO (2409.TT), Innolux (3481.TT), HKC (248.HK), and CHOT (pvt) that Samsung already buys panels from, Samsung tends to go with suppliers that have large capacity, leading to a secure supply, without violating the share limit..
At least to a degree, this puts BOE in the catbird seat or at least gives it some room to negotiate with Samsung, as Samsung Display is out of the large panel LCD business and supplies only QD/OLED TV panels to its parent which make up only a small portion of Samsung’s TV panel needs. This leaves Samsung Electronics to outsource all of its LCD TV panel purchases. As they cannot increase purchases from Chinastar without overstepping their limit, BOE is the obvious choice if they can come to an agreement over royalties.

Looking Back

4/22/2025

Looking Back

Normally, when we look at monthly display panel sales, they are ~5 weeks old[1] and represent the totals for the previous month. While we do the same this month, it seems a long time has passed since March, making those metrics seemingly less relevant. As CE brands spent much of March pulling forward production and shipments to beat the Trump ‘Liberation Day’ deadline, it is difficult to look at the data the same way it is normally used. That said, large panel shipments were ~73m units, up 11.1% m/m and up 6.0% y/y, while total shipments were 5.1% above the typical (5-year) March shipment average. This put the quarterly shipment total at 202.3m units, 6.2% above typical, indicating that the quarter (Jan/Feb) was already about 1% above average.
In terms of sales, total large panel sales for March were ~$6.24b, up 12.7% m/m, but down 6.4% y/y, while on a YTD basis, sales were up 4.5% y/y. Among those panel manufacturers that are primary large panel producers, the biggest gainers in March were both South Korean producers, Samsung Display (pvt) and LG Display (LPL), up 57.9% m/m and 34.8% m/m respectively. This implies that while both South Korean panel producers accounted for only 21.5% of total panel revenue for March, they accounted for ~38% of March large panel sales growth. SDC feeds parent Samsung Electronics (005930.KS) QD/OLED TV set and OLED monitor line, and, as much of the Samsung’s TV line is assembled in Mexico before shipping to the US, we expect these were rush orders to beat the early April deadline. LG is basically the same in the TV space.
Now that the deadline has been pushed out until July, we expect April large panel shipments will better reflect actual demand and inventory levels but given the capricious nature of comments from the President and White House, it is still difficult to predict what path consumers and CE companies will take in the short-term. At our gut level, we feel that as negotiations with potentially heavily tariffed countries continue, the WH spin will be positive and while the reality of the outcomes is questionable at best, consumer sentiment on trade will improve through May and early June. That said, the offset will be increasing prices of both components and CE products as old inventory is sold, and higher tariffed goods take their place. This leaves us, once again, in a net neutral position for the next month (May) and a slight negative bias for the CE space in 2H thus far, as consumer pre-tariff buys and higher prices weaken typical holiday demand.

[1] 2 weeks from previous quarter mid-point and 3 weeks into following quarter.

Large Panel LCD Industry Sales - 2020 - 2025 YTD - Source: SCMR LLC, OMDIA, Witsview, IHS, Company Data

Panel Pricing – April

4/22/2025

Panel Pricing – April

It is easy to tell that the postponement of the most severe tariffs is better than if they had been implemented. It is certainly better for CE brands who will not incur additional massive increases in cost and absolutely better for consumers, who will only have to incur the tariffs on Chinese goods and the broader ‘token’ 10% across-the-board tariff hike. However for anyone trying to run a CE business, at almost any level, the inability to plan both short-term and long-term strategies with little or no understanding of the US government’s plan for trade, makes their own planning almost impossible.
The only area where there seems to be some actual demand, not surprisingly, is the server space, where monitors are a necessary adjunct. However many monitor panel producers are still losing money on monitor panels and are reducing production whenever possible, leaving Chinese producers to pick up the slack. This has led to slight monitor price increases but was offset by weak pricing for notebooks and TVs, where tariff issues continue to keep brand demand weak. Pricing pressure overall has been modest, but brands will be looking for some panel price concessions as they absorb higher tariff costs, and that means both up and down the supply chain. Whether panel producers are willing to share in some of the tariff pain is still an open question, but at some point, the cost of components, both at the panel level and the module level, will add to their cost burden as it has for brand level products.
We expect addition stocking pull-ins as we get closer to the end of June, which, as we have previously noted, sets a poor tone for the 3rd and 4th quarters, typically the better half of the year for the CE space. The only hope right now is that those consumers who did not jump in and buy before the last tariff announcements might now feel the urge before July, assuming the potential for higher prices. We believe that most CE brands are looking to share tariff price increases with the supply chain, but those negotiations are ongoing and will have to account for the potential for additional tariffs in July, making price negotiations even more difficult than usual.
That said, we believe that while China will still remain a tariff focus, we expect most of the broad ‘reciprocal’ tariffs recently proposed will not be put into effect as promises of trade balancing are made, but whether those promises are fulfilled remains questionable. Right now, we expect panel prices to remain relatively flat for May as most take a wait and see approach to near-term planning.

What Does Taiwan Know?

4/10/2025

What Does Taiwan Know?

To say that 1Q was not a typical quarter for the display space is an understatement, and we expect something similar in 2Q as the current US administration seems to change course on trade on a daily basis. Inventory stocking and pre-tariff buying have altered typical buying patterns as can be seen in the table below, which shows the monthly sales (NT$) for AU Optronics (2409.TT), Taiwan’s largest panel producer. Our expectations, prior to yesterday’s tariff course adjustment, was that large tariff related price increases would begin to show as previous landed inventory begins to wind down (end of April/early May), with panel producers seeing a more accelerated slowdown as brands hold back or reduced new orders as prices rise.
The fact that there was a date when the new tariffs were to be enacted was at least an anchor point where brands could make decisions about how to deal with new tariffs, but with yesterday’s 90-day hold, that anchor date has moved again and leaves brands in a quandary about how consumers will react to the postponement, in order to plan production and shipments for 2Q and beyond. This goal-post movement will elongate the ‘tariff cycle’ that has already changed the typical production patterns for the display space, particularly for those producers that feed major brands in the US, so whatever we thought might happen soon is now spread across a wider window..

Given the circumstances, we would still expect brands to pause or slow production and shipments, but for a relatively short period of time, while they try to make sense of the administration’s tariff volatility, but the real question is how consumers will react. There has certainly been signs that some consumers had been buying CE products in anticipation of expected price increases in March, and the table above, albeit specific to a single large panel producer, illustrates that pull-in buying, or at least production that could facilitate that buying, has helped 1Q sales results. However, the increased Chinese tariffs and the remaining 10% across-the-board tariffs still overhang much of the CE space and the more general anxiety over the potential for a tariff-related economic slowdown still remains.

Resurrection

3/24/2025

Resurrection

Sony (SNE) has announced a new technology that is thought to be a potential game changer for the display industry. There is a problem with that thought however as not only did Hisense (600060.CH) announce a TV with similar technology in January, but Sony itself introduced a analogous product over 20 years ago. The idea is similar to the concept behind Mini-LED TVs, which have been keeping LCD technology competitive in their race against OLED technology.

Liquid crystal, the technology behind LCD TVs, acts as a gate, allowing or blocking light from an LED backlight from reaching a color (RGB) phosphor or quantum dot converter. The brightness of the LED backlight is quite important, but because the number of pixels in a 4K TV is ~8.3 million, each LED in the backlights must illuminate a number of pixels. If some of those pixels are ‘off’ and some are ‘on’ the LED light behind the ‘off’ pixels can bleed through the liquid crystal and cause the black points (the ‘off pixels’) to be gray.

Over the years, as LED technology was refined and improved, TV set designers used smaller LEDs that helped to reduce that ‘bloom’ common to older LCD sets. Now, Mini-LED TV sets can have thousands of zones (a zone is just a small group of LEDs that act as one) which helps to reduce the gray issue, but unless there is an LED in the backlight for every pixel, those issues will still exist (it’s been tried). OLED displays are different in that they are self-emissive, meaning they directly emit light, without a backlight, so when they are off, they are black. There is some light ‘bleed between adjacent pixels in OLED displays but the contrast ratio (the difference between the blackest black and the whitest white), is almost infinite in OLED displays which sets them apart.

But what about color? In an LCD display, the LED backlight is typically white and when it passes through the liquid crystal it hits a red, green, or blue dot of phosphor and becomes one of three parts of an LCD RGB pixel. The quality of the color in an LCD display is governed by the quality of the LED backlight and the phosphors, while in an OLED display, the quality is based on the purity and efficiency of the emissive materials themselves. If one were to strip off the ‘image’ part of an LCD display, the LED backlight would look like constantly moving areas of light and dark that follow the brightness of the images, while an OLED display has no backlight.

Sony has taken things one step further. Instead of squeezing more white LEDs into the backlight (adding zones) they are using three (Red, green, and blue) LEDs and a lens instead of a white LED. This allows the backlight to control brightness (on/off) as it did in the previous example but also allows the 3 LED combination to create backlight color that reduce the burden on the phosphor by giving the backlight itself color

Conceptually this is a great idea, and one that Sony used in 2004 (46” set for $10,000) when it released the Qualia 005, the first RGB backlite TV set. However, at the time, LEDs were large and had color uniformity issues. They produced a lot of heat, and the complexity of the electronics needed to disassemble an image into ‘color zones’ and adjust 3 (RGB) LEDs instead of one white one, along with the brightness of each, was a stretch for 2004 electronics. However Sony did not forget the idea and just announced a high-density RGB LED backlight system that it expects to commercialize sometime this year.

Figure 6 - Sony Qualia 005 (2005) - Source: obsoletesony.substack.com

The good news is that LEDs are much smaller, although Sony has yet to give details about LED size, the number of zones, the details of each zone, and the electronics can handle the image processing (AI & ML), but some of the old problems still exist. The cost will be a very big factor as instead of 5,000 white LEDs, the RGB system would contain 15,000 LEDs (RGB) and a lens, and instead of controlling the brightness of 5,000 white LEDs, the system will have to control the brightness of 15,000 LEDs (5,000 is just an example, we expect there will be more zones as the Hisense set has at least 10,000 zones). LED uniformity, while certainly better than 20 years ago, gets more difficult to maintain as LEDs get smaller, and as LEDs age, their uniformity also changes, so the sheer number of LEDs needed makes the complexity of building such devices far more onerous and expensive.
So does this mean that Sony is going to let the idea of an RGB LED backlight TV wither on the vine again? No, we expect it will make it way toward the top of the Sony premium TV line and will compete with other OLED and potentially Micro-LED offerings. Hisense, the first to introduce a Mini-LED TV, will also showcase the technology, but at least for a while it will take its place in the ultra-high quality color world of video editing monitors and those with dollars to spend on the best of the best, while the rest of us palookas have to settle for Mini-LED, OLED, or QD/OLED sets. If we are wrong and Sony has found a way to produce RGB LED backlight systems for a reasonable price, we will be in line to try one, but with so many potential display technologies on the horizon, time is of the essence.

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