March Large Panel Display – Winners and Losers

March Large Panel Display – Winners and Losers
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Perhaps the title of this note is not completely accurate, as there were really no losers in the panel space in March.  The large panel segment grew 11.9% m/m in terms of revenue and 8.5% in terms of shipments, while large panel ASPs grew 3.1%.  On a y/y basis, revenue grew 56.6%, with shipments up 26.7% and ASP’s up 23.6%.  While the y/y growth was impressive in March, the industry is still comparing against a period of declining panel prices near the onset of COVID-19, so we would expect y/y comparisons to remain unusually strong for the first half, while becoming progressively less abnormal as the year progresses

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

On a regional basis Taiwan saw the largest increase m/m at 20.9%, while Japan saw the largest increase on a quarterly basis, but Fig. 2 points out that Japan’s share of the LCD large panel market is miniscule compared to other regions.  Fig. 2 also points out the negative March y/y and 1Q q/q and y/y comparisons for South Korean large panel producers, as both Samsung Display (pvt) and LG Display (LPL) have decreased their large panel capacity through plant sales or closings

LCD Large Panel Display Revenue Share by Region - 2012 - 2021 YTD - Source: SCMR LLC, Displaysearch, Witsview, Company Data

On a company basis, the table below looks at those panel suppliers that are primarily large panel producers, as a number of small panel producers also produce small quantities of large panels.  This can make large panel performance for these types of producers very volatile, given that small changes in such numbers can lead to large percentage changes, but little impact on the industry as a whole.  Companies we have excluded from the table below are:
Hannstar (6116.TT)
InfoVision (688055.CH)
Japan Display (6740.JP)
Tianma (000050.CH)
 
Given the relatively unusual circumstances of last year, most of the y/y comparisons don’t give much new information, and the negative results from Samsung Display and Panda have more to do with the sale of LCD fabs than actual performance, with BOE and Chinastar being the receivers of those fabs.  That said, Sharp stood out with its best monthly revenue (Feb./Mar.) since mid-2014, and Chinese large panel producers HKC and CHOT saw their best quarters since inception.  While capacity increases are embedded in some of the more positive monthly and quarterly results, higher utilization and large panel price increases would be the root for much of the gains 

Large panel shipments did not see growth in 1Q, at least on a q/q basis (-1.8%), however looking at the 1Q 5 year q/q average for large panel shipment, which is -9.7%, the relatively small drop in large panel shipments in 1Q is unusually strong.  Subsequent q/q growth will compare against higher averages as noted in the table below.  Shortages in the display space have become more of a problem for large panel producers as the year has been progressing, and with relatively little foundry capacity increases (drivers, TCONs), and tight supply of glass and raw material price increases, we expect large panel price increases will be the only way large panel producers will see increasing revenue on a monthly or quarterly basis.  There will be some capacity increase at Gen 7 and above fabs (+4.1%), but the bulk of any improvement will come from further panel price increases, against progressively stronger 2020 results, particularly in 2H, and higher 5 year averages.