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Out With The Old, In With The New

Out With The Old, In With The New

For its entire existence, the vast global television market has survived and thrived amid a series of transformations. Here is how it is expected to surf the next wave in 2020.

The television market is at a crossroad with stagnating unit volume sales, commoditization, and looming extended excess capacity. All this translates into shrinking profitability while the industry remains extremely CapEx-intensive. The industry, therefore, is striving to develop new features to trigger a replacement cycle and compel consumers to upgrade their TVs with newer and more expensive models. Individual players are all striving to differentiate. However, in the global display panels market, TVs are expected to have the highest growth rate, owing to the increase in sales of UHD and OLED in developing economies, such as India, Brazil, and China.

It is further estimated that the display sizes will increase – 70-inch+ screens are taking over from 60-inch and 84-inch screens are being replaced with 86-inch versions. This shift is majorly driven by the incorporation of more efficient processes that lead to less wastage, while producing more number of panels. Also, bezels are becoming narrower, so the actual visible screen is bigger.

The consumer spending in India is increasing, owing to rising disposable income, due to which the demand for televisions is witnessing a high spike. As a result, the TV makers in India are launching larger screens with advanced technologies, which, in turn, is likely to boost the market growth in the country. Subscriptions, such as Netflix and Amazon Prime, have been made available for smart and Android TVs, owing to which, the demand is gaining high traction. Owing to favorable government regulations associated with FDI, foreign companies are regularly offering premium TVs at competitive prices. This is expected to result in increased demand for display panels.

Honeymoon may be over for LCD TVs

For most of the 2010 decade, the global flat-panel LCD TV has been one of the stable fixtures in the consumer electronics market. Having completely replaced the old CRT-based TVs, LCD TVs have benefitted from technology advances that have improved resolution and made possible large screen sizes, over 50-inch, a much more common sight in many households. But LCD TVs are hitting a roadblock. For the first time since 2011, global LCD TV panel shipments are expected to decline in 2020, falling by 7 percent to total 265 million, according to IHS Markit. The 7 percent decrease represents the largest annual decline in the history of the LCD TV industry.

The 2020 decline will come after two consecutive years of market stagnation, with shipments at 289 million units in 2018 and 284 million in 2019. Market growth stopped during those years despite fab capacity expansions at Gen 10.5 and Gen 8.6 TFT-LCD facilities in China. The cessation of growth also defied the growing demand for larger LCD TV panels, sized 55-inch and above. The slower demand and increasing oversupply of LCD TVs have put downward pressure on panel prices and prompted suppliers to cut production. Many suppliers have taken a more conservative approach by reducing fab utilization starting in mid-2019 onward and initiating more aggressive fab restructuring plans.

Since the Chinese panel makers started their Gen 10.5 fabs in 2018, Korean and Taiwanese panel makers running Gen 7 and Gen 8 fabs have been facing tough competition in the larger-size LCD TV market. Due to rapidly declining prices of 65-inch and 75-inch LCD TV panels produced by Gen 10.5 fabs, they are now in a critical situation. As a result, Korean LCD TV panel makers have resorted to restructuring their LCD TV fabs, while their Taiwanese competitors have reduced LCD TV panel production and diverted resources to producing monitors and notebook PC panels instead. This scenario is expected to lead to a big drop in 2020 LCD TV panel shipment.

The Korean share of LCD TV panel shipments in 2020 is expected to decrease by about 9 percent compared to 2019, while the Chinese share is set to increase by 10 percent. Korean LCD TV panel makers may eventually exit the LCD TV panel business, relinquishing their market share to their Chinese rivals.

Even though the volume of the LCD TV panel shipments has eroded, demand for larger-size panels will continue to grow – 65-inch and larger LCD TV panel shipments will reach 37 million units in 2020, up from 30.6 million in 2019. However, there is a possibility of supply tightness of some panel sizes due to the shuttering of Gen 8.5 fabs that produce 49-inch and 55-inch LCD TV panels. A shift in technology from LCDs to OLED technology could also factor into the decline of LCD TV panels.

OLED – Increased share in TV market

OLED TV has secured a strong presence in the global premium TV market. According to DSCC, OLED panel unit shipments will reach 1.06 billion by 2023. The growth will peak in 2020 (with a 27% unit growth and 25 percent revenue growth from 2019). LG Display is converting LCD TV capacity to OLED and is also investing an additional KRW 3 trillion into a Gen 10.5 OLED production line, mainly producing >=65-inch TV panels. It is planning to almost double its TV panel production in 2020. BOE and CSOT are planning to bring in OLED capacity in future years. LG Display is also working on RGB IJP (ink jet printing) technology. Samsung Display is building a pilot production facility for QD OLED (with QD color convertor).

In 2019, many panel suppliers (JOLED, BOE, CSOT, SDC, and AUO) were able to demonstrate IJP OLED displays in various conferences and some will start mass production in 2020. First commercialization of soluble OLED panel is expected to be from JOLED’s new Gen 5.5 fab with mass production in 2020. IJP can enable higher display performance by enabling top-emission large panels; this will facilitate the 8K revolution in OLED TV and increase optical performance.

AMOLED TVs to make a mark in the display market

Driven by falling prices and rising consumer demand for thinner, lighter, and more colorful TVs sets, global market revenue for AMOLED displays used in TVs is expected to more than double during the next 6 years.

Global revenue for AMOLED TV displays will expand to USD 7.5 billion in 2025, up from USD 2.9 billion in 2019. Although AMOLED TVs have only been on the market since 2013, they are rapidly gaining share, with these types of sets expected to account for 20.6 percent of the USD 36-billion TV display market in 2025, up from just 8.6 percent in 2019.

Starting in 2020, AMOLED TV ASPs are expected to begin to decline due to increases in manufacturing capacity, spurred by the adoption of a more advanced production process. This will pave the way for much more widespread adoption of AMOLED TVs. The AMOLED TV ASP currently is about 4x more than the LCD TV ASP, based on a comparison of 65-inch panels with a 3840×2160 resolution. Because of this, TV brands are eager to reduce AMOLED prices to make them more attractive to consumers.

Quantum dot – Entering expansion phase

Quantum dot display will be entering an expansion phase in 2020 with lower prices, availability of TV in many sizes, and more expansions into other applications such as monitors and notebooks. Samsung Display has announced its plan to invest 13.1 trillion won (about USD 10.5 billion) up to the year 2025 in QD-OLED TV R&D and production line. It will convert LCD production line to QD-OLED. The new QD-OLED TV line (Gen 8.5) is expected to start production in 2021. Besides Samsung, Vizio, TCL, Hisense, and Xiaomi have joined in for QD TV. Lower retail prices for QD TV will drive demand.

4K and 8K – TVs advance while content lags

While flat-panel TV makers have announced 8K TV sets, it is the 4K TV market that will continue to grow to cement its place as the mainstream TV format over the next few years. ABI Research forecasts that 4K flat-panel TV shipments will grow at 13 percent CAGR to reach 233 million in 2024.

However, the lack of content and distribution models is a significant barrier. Aside from 8K channels provided by Japanese broadcaster NHK, there are no other 8K broadcast channels currently available, although Korean Broadcasting Corporation (KBS) is working toward an 8K broadcast. While streaming service provider Rakuten recently announced its interest to provide 8K content in late 2019, service providers overall are not ready for 8K content, nor is there much incentive for content providers due to the limited 8K TV set adoption at present.

8K content also needs larger data files, which creates challenges in content distribution and data management. Versatile video coding (VVC), which achieved 34 percent higher efficiency over HEVC, is currently in the process of standardization. VVC will play a vital role in driving the 8K TV market when the final standardization completes in 2020. 8K is likely to gain momentum only when challenges are addressed, and the ecosystem evolves.

For now, 4K will be the dominant format of the flat-panel TV market, and of the content ecosystem as a result. 4K TV household penetration will reach slightly more than half of the TV households in mature markets, and with penetration still relatively low in emerging markets, there is significant room for 4K market growth in the years to come.

HDR gets better and brighter

High dynamic range (HDR) was a hot TV topic in 2019, and it will be again in 2020. While many manufacturers tout HDR capability in their 4K TVs, there is no way to tell how well a set will handle HDR just by looking at it in the store. Many sets do not have the brightness, black levels, or video processing ability to really show off HDR programs to their full effect. In 2019 it was found that it was mainly pricier TVs that were able to deliver an effective HDR experience, though there were a few exceptions. In 2020, more 4K TVs are expected to be able to reproduce the enhanced brightness range and nuanced shadow detail that the best HDR content requires. Several manufacturers are likely to promote TVs with peak brightness levels, significantly higher than the 1000 nits typically required for top HDR performance. 2020 will be about if TV manufacturers are able to deliver on the promise of HDR.

Other technology developments

Some other developments that are expected to surface in 2020 are higher frame rates, HDMI 2.1, and ATSC 3.0. These technologies are interesting, but they will not really become important for consumers until further down the road.

Most TV shows are delivered at 60 frames per second. A few brands are expected to talk about TVs that display video at 120 fps instead. Sports networks are especially interested in this technology – doubling the number of frames displayed each second can help reduce motion blur during fast-moving action.

Consumers will also start to see some TVs with new HDMI 2.1 connectors, which provide greater bandwidth. This latest version of HDMI can support 8K video resolution as well as faster frame rates with 4K content. While some premium TVs in 2020 will come with HDMI 2.1 inputs, many mainstream sets will still have HDMI 2.0 connectors.

The newest standard in TV broadcast technology is ATSC 3.0, and it is poised to go big in 2020, delivering a 4K picture over the air for the same completely free price as current 720p and 1080p broadcasts. The new standard has been in the works for several years, but broadcasters’ recent adoption of the standard will make ATSC 3.0 broadcasts a reality across the country in the coming months.

FPD area demand comes roaring back to robust growth

Following weak sales growth in 2019, global demand for flat-panel displays is expected to increase by a robust 9.1 percent to reach 245 million square meters in 2020, up from 224 million in 2019. Although there are still uncertainties due to the trade war between US and China, demand for FPDs is expected to increase on the back of historically low panel prices and the impacts of various sports events held during even-numbered years. In particular, area demand for OLED displays is expected to increase sharply amid expectations for significant growth in the mobile phone and TV markets.

In 2019, demand for FPDs fell short of expectations in the consumer market amid escalating trade tensions between US and China and a slowdown in global economic growth rates. The area demand increased by a negligible 1.5 percent compared to the previous year. The future direction of the market will hinge upon the progress of talks between US and China, which have been engaged in negotiations since October 2019.

Despite remaining uncertainties, demand for FPDs is projected to increase by nearly a double-digit rate in 2020 owing to several factors. One significant growth driver is the Tokyo Olympics, which is scheduled to take place in July and August 2020.

Japan’s NHK plans to broadcast the 2020 Olympics in 8K resolution. Many TV brands are expected to try to boost sales ahead of the Olympics by promoting their 8K capabilities. Alongside the rise in resolution, TV brands will cater to demand for larger-size sets. The weighted average size of an LCD TV is expected to expand to 47.6-inch in 2020, up from 45.1-inch in 2019. This increase in size is the result of rising production and increased yield rates at new Gen 10.5 LCD fabs.

Also, the volume of panel supply is expected to increase with the launch of mass production at LG Display’s new Guangzhou OLED fab. Overall OLED display area growth is expected to rise by more than 80 percent in 2020 as prices and production costs fall. More new products will be introduced in the market in 2020.

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