Panel Pricing – February
February is an unusual month for the display panel business in that the Chinese New Year holiday disrupts panel production as workers travel home to visit family, however COVID-19 restrictions has lessened some of that travel given China’s strict local and provincial lockdowns on even the smallest outbreaks. Typically (see Figure 7) January and February are the weakest for display shipments on a m/m basis, so we are careful not to ‘over-read’ pricing data this month, however we can give some perspective on how panel pricing stacked up against our expectations.
On a broad basis, TV panel pricing was better than expected, albeit still down 2.2% for the month. While this is certainly a positive for those panel producers that have an orientation toward large panel production, and it sets the tone for more modest TV panel price declines or even an increase in March (typically the strongest m/m shipment month), we do not expect that it sets the tone for TV panel pricing for the entire year and would look to March TV panel pricing data to see if typical m/m seasonality holds true before estimating TV panel pricing for the year. As an offset to the better than expected TV panel pricing was worse than expected IT panel pricing, and as we have stated a number of times previously, the industry has been moving production capacity from TV panel production to IT panel production for the last year as an offset to the rapid decline in TV panel pricing. This creates additional industry sensitivity to IT panel price changes and as can be seen in Figure 6, the trend is down.
There is a bit of nuance toward TV panel pricing in February, with the smallest TV panel sizes (32”) seeing essentially flat pricing and large panel sizes (43” and above) seeing declines. Figure 8 shows 32” panel; pricing since 2018, and while the recent price declines did not trace 32” panel pricing all the way back to the low set back in late 2019, it did retrace much of the 32” panel price increases seen in 2H ’20 and 1H ’21. In the past 32” TV panels represented ‘small’ TVs and were considered commodity panels, manufactured by a large number of panel producers, however more recently some of those panels are being used for gaming monitors, which has given the size segment a bit more cache and will likely help to maintain a more stable price, but does not rule out further price reductions..
Figure 9 shows the same price data for 65” TV panels, which are more the mainstay of the TV set market. Again much of the 2020 and 2021 panel price gains have been reversed, however the price curve has yet to bottom and is currently 9.3% above (based on March expectations) the chart period low, so we expect less aggressive declines but a near return to previous lows, as the competition among panel producers is most intense in the 55” and 65” TV panel categories.
All in, March should, if seasonality holds, be a better month for shipments, but will still see panel price declines, particularly in the IT segment (monitors, notebooks, tablets), which will affect sales performance. That said, we expect panel producers to see volume increases high enough to offset panel price declines in March, which will help margins but do not expect that to be sustainable in April, particularly as the industry concentration toward IT products faces further panel price declines. We note that on a long-term basis panel prices decline and while the COVID-19 pandemic has changed that over the last year or so, we expect the industry to return to that mode during 2022 as the pandemic is brought further under control. While we still expect price cycles, as has been the case in the past, we expect the display industry, at least the LCD portion, to return to a more passive mode as long as we don’t see a major resurgence in the infection rate.
On a broad basis, TV panel pricing was better than expected, albeit still down 2.2% for the month. While this is certainly a positive for those panel producers that have an orientation toward large panel production, and it sets the tone for more modest TV panel price declines or even an increase in March (typically the strongest m/m shipment month), we do not expect that it sets the tone for TV panel pricing for the entire year and would look to March TV panel pricing data to see if typical m/m seasonality holds true before estimating TV panel pricing for the year. As an offset to the better than expected TV panel pricing was worse than expected IT panel pricing, and as we have stated a number of times previously, the industry has been moving production capacity from TV panel production to IT panel production for the last year as an offset to the rapid decline in TV panel pricing. This creates additional industry sensitivity to IT panel price changes and as can be seen in Figure 6, the trend is down.
There is a bit of nuance toward TV panel pricing in February, with the smallest TV panel sizes (32”) seeing essentially flat pricing and large panel sizes (43” and above) seeing declines. Figure 8 shows 32” panel; pricing since 2018, and while the recent price declines did not trace 32” panel pricing all the way back to the low set back in late 2019, it did retrace much of the 32” panel price increases seen in 2H ’20 and 1H ’21. In the past 32” TV panels represented ‘small’ TVs and were considered commodity panels, manufactured by a large number of panel producers, however more recently some of those panels are being used for gaming monitors, which has given the size segment a bit more cache and will likely help to maintain a more stable price, but does not rule out further price reductions..
Figure 9 shows the same price data for 65” TV panels, which are more the mainstay of the TV set market. Again much of the 2020 and 2021 panel price gains have been reversed, however the price curve has yet to bottom and is currently 9.3% above (based on March expectations) the chart period low, so we expect less aggressive declines but a near return to previous lows, as the competition among panel producers is most intense in the 55” and 65” TV panel categories.
All in, March should, if seasonality holds, be a better month for shipments, but will still see panel price declines, particularly in the IT segment (monitors, notebooks, tablets), which will affect sales performance. That said, we expect panel producers to see volume increases high enough to offset panel price declines in March, which will help margins but do not expect that to be sustainable in April, particularly as the industry concentration toward IT products faces further panel price declines. We note that on a long-term basis panel prices decline and while the COVID-19 pandemic has changed that over the last year or so, we expect the industry to return to that mode during 2022 as the pandemic is brought further under control. While we still expect price cycles, as has been the case in the past, we expect the display industry, at least the LCD portion, to return to a more passive mode as long as we don’t see a major resurgence in the infection rate.
Aggregate Monitor Panel Pricing & ROC - 2019 - 2022 - Source: SCMR LLC, IHS, Company Data
Aggregate Notebook Panel Pricing & ROC - 2019 - 2022 - Source: SCMR LLC, IHS, Witsview, Company Data
Aggregate Mobile Panel Pricing & ROC - 2019 - 2022 - Source: SCMR LLC, IHS, Witsview
Aggregate TV Panel Pricing & ROC - 2019 - 2022 - Source: SCMR LLC, IHS, Company Data
Aggregate Tablet Pricing & ROC - 2019 - 2022 - Source: SCMR LLC, IHS, Company Data
Aggregate Large Panel Pricing & ROC By Category - 2021 - 2022 YTD - Source: SCMR LLC, OMDIA, Witsview, Stone Ptrs. Company Data
- Display Industry M/M Shipment Seasonality - 5 Year Average - Source: SCMR LLC
32" TV Panel Pricing - 2018 - 2022 YTD - Source: SCMR LLC, IHS, Witsview
65" Aggregate Panel Pricing - 2018 - 2022 YTD - Source: SCMR LLC, IHS, Witsview
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