Fun with Data – LCD Utilization in China
As we have noted previously, panel producers have finally begun to accept the fact that the demand levels seen in 1H ’21 are not continuing this year, and that inventory levels have been increasing faster than sales. This has led to utilization rate reductions as a number of display products become unprofitable and maintaining full equipment readiness is no longer cost effective. While these cuts should have started earlier, panel producers were hoping that demand would return in 2Q, and then in 3Q, finally facing the fact that neither was the case. As China has become the regional share leader in the LCD display space,it behooves Chinese panel producers to bring down utilization I order to reduce inventory and tighten supply.
When necessary, we track those utilization levels to see if utilization cuts among Chinese panel producers are lip service or are meaningful enough to make a difference, and while the cuts are now reaching levels that have some impact on production, it was not until the end of May that such cuts began to any large degree. While we do not have hard data for July large panel industry sales (we extend June’s sales through July until the data becomes available), but the initial cuts to utilization quickly brought done sales but have made little difference through the end of June, particularly the cuts at ultra-large fabs (Gen 10+), and while Gen 6 OLED utilization rates were low in China to begin with, they have not changed materially over the last few months. Hopefully the additional utilization rate cuts made in July and thus far this month will have more of an impact, as inventory reductions need to be more rapidly effected if there is to be any hope for improvement at the panel level in 3Q or 4Q, so we will republish the data as soon as July hard data becomes available. Until then the data seems to indicate that utilization rates at Chinese display fabs need to be dropped further.
When necessary, we track those utilization levels to see if utilization cuts among Chinese panel producers are lip service or are meaningful enough to make a difference, and while the cuts are now reaching levels that have some impact on production, it was not until the end of May that such cuts began to any large degree. While we do not have hard data for July large panel industry sales (we extend June’s sales through July until the data becomes available), but the initial cuts to utilization quickly brought done sales but have made little difference through the end of June, particularly the cuts at ultra-large fabs (Gen 10+), and while Gen 6 OLED utilization rates were low in China to begin with, they have not changed materially over the last few months. Hopefully the additional utilization rate cuts made in July and thus far this month will have more of an impact, as inventory reductions need to be more rapidly effected if there is to be any hope for improvement at the panel level in 3Q or 4Q, so we will republish the data as soon as July hard data becomes available. Until then the data seems to indicate that utilization rates at Chinese display fabs need to be dropped further.
China - LCD Production Utilization Rates - Source: SCMR LLC, CINNO
China - OLED Production Utilization Rates (G6 Fabs Only) - Source: SCMR LLC, CINNO
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