The trend seems to be moving toward OLED TVs or else 60-inch and larger panels LCDs.
The global TV market grew 2.9 percent in 2018, reaching 221 million units, because of a sales surge in H12018, as many consumers upgraded their TVs to watch the 2018 FIFA World Cup. Shipments of richly featured TV sets continued to grow. In fact in the fourth quarter of 2018, and for the first time, more than half of all shipments were ultra-high definition (UHD) TVs and screen sizes also continued to swell.
UHD TV growth led by larger screens. UHD TV shipments reached 99 million units, propelled by larger screen sizes. China led the global market with 30.1 million TVs shipped in 2018, followed by North America with 24.7 million. Nearly two-thirds (63 percent) of TV sets in Western Europe shipped with UHD resolution in the fourth quarter of 2018, the largest share of any global region. Just 18,600 8K TVs shipped globally in 2018. The launch of an 8K channel by Japan’s broadcasting corporation, NHK, was an important landmark last year, which led to acceleration in 8K TV shipments in Japan during the fourth quarter of 2018.
Smart TVs continue to rise. Smart TVs that support UHD through streaming services continued to rise in volume shipped in 2018. More than three-quarters of TVs shipped in the fourth quarter of 2018 were smart TVs. In North America more than 85 percent of all TVs were smart TVs, which is 10 percentage points higher than the previous year.
OLED TV gets more affordable. Led by record shipments to Japan and Western Europe, just under 1 million (900,000) OLED TVs shipped in the fourth quarter of 2018, rising 20 percent over the prior year. Thanks to increasing competition, large-screen 55-inch OLED TVs hit new levels of affordability in Western Europe. Meanwhile, OLED TV shipments to North America fell 26 percent, year over year, due in part to aggressive price declines in very large LCD TV sizes.
Flat-panel display demand increased by double digits for the first time in four years
For the first time in 4 years, demand for flat-panel displays grew double digits at 10.5 percent, year-over-year, to 221 million square meters in 2018. Although uncertainties about the global economy grew in the second half of 2018, panel purchasing for the year-end hot season was better than expected. Lower prices fed a sharp increase in panel demand for TVs, smartphones, and desktop monitors.
Demand for OLED TV panels increased by 65.6 percent, year-over-year, reaching 3 million square meters in 2018. LCD TV panel demand rose 10.7 percent to 154 million square meters during the same period. Growing popularity of 60-inch and larger TV panels contributed to the growth in overall TV panel area demand.
Panel demand for desktop monitors increased by 11.9 percent in 2018, led by the US market. As the gaming market grew, the preference for larger monitors also raised demand. Demand for 25-inch and larger monitor panels jumped 39 percent in 2018 compared to a year ago.
As the smartphone market saturated, smartphone panel demand declined to 1.6 billion units in 2018 from 1.7 billion units in 2017. However, in terms of area, demand grew 6.1 percent in 2018, as a large number of smartphones applied full-screen panels.
IHS Markit forecasts that the flat-panel area demand for 2019 will grow 5.1 percent, slower than it did in 2018. The economic forecast by IHS Markit has recently been revised downward, which will partially contribute to slower growth in end-market demand.
Chinese panel makers becoming aggressive. With Chinese panel makers accelerating the mass production of large thin-film transistor (TFT) liquid crystal display (LCD) TV panels faster than expected, they accounted for 33.9 percent of the 60-inch and larger LCD TV panel shipments in the first quarter of 2019. Their market share has expanded nearly 10 times from 3.6 percent in just over a year. South Korean panel makers still accounted for the largest share in the 60-inch and larger LCD TV panel shipments, with a 45.1 percent share in the first quarter. However, Chinese panel makers’ share in the large LCD TV panel market is expected to continue to grow.
BOE accounted for 29 percent of the total 60-inch and larger LCD TV panel shipments in the first quarter of 2019. It is estimated that the B9 10.5G fab has reached its maximum capacity of 120,000 sheets in the first quarter of 2019. ChinaStar also started to mass produce large LCD panels at its T6 10.5G fab in the first quarter. CEC-Panda and CHOT ramped up mass production at their 8.6G fabs to the maximum design capacity in the first quarter. Foxconn/Sharp is forecast to begin mass production at their Guangzhou 10.5G fab in the second half of 2019.
Shipments of larger than 9-inch TFT-LCD panels reached 178.3 million units in the first quarter of 2019, down 1 percent from a year ago. By area, the shipment increased by 6.7 percent to 49.1 million square meters during the same period. BOE led the unit shipments of large TFT-LCD panels with a 24.6-percent share in the first quarter of 2019, followed by LG Display (18.8 percent) and Innolux (16 percent). By area shipments, LG Display accounted for the largest share of 20 percent, followed by BOE (19.9 percent) and Samsung Display (14.1 percent).
Large flat-panel market to rebalance in 2019. After a period of oversupply, the large flat-panel display (FPD) market seems to be moving toward a more balanced and even tight market by the third quarter of 2019, albeit for a brief period.
In its AMOLED and LCD Supply Demand and Equipment Intelligence Service report, IHS Markit says that production capacity for large FPDs, defined as screens larger than 9 inches, has generally been growing at a faster rate than demand for more than a year now. This growth mainly comes from new Gen 8.6 and Gen 10.5/11 factories in China, in addition to productivity improvements at legacy factories. Its data shows that with the exception of the third quarter of 2018, when demand was seasonally high, prices have deteriorated continuously since the second half of 2017. In the fourth quarter of 2018, weighted-average large-panel prices fell 2.7 percent. The analyst expects this rate of decline to accelerate to 5.4 percent in the first quarter of 2019.
Yet the current imbalance for large FPDs is causing panel prices to fall, which is weighing heavily on profitability of panel makers. The associated declining profitability is already contributing to capacity rationalization, and low prices are currently expected to stimulate demand. The current large FPD glut is forecast to fall to 8.2 percent, below the 10-percent balance bar, in the third quarter of 2019.
Looking forward, IHS Markit believes that the trend revealed in its study will see some panel makers either close legacy LCD facilities or convert them to organic light-emitting diode (OLED) lines while some others will postpone their planned investment in new facilities. Moreover, a more balanced supply of large FPD panels should lead to firmer pricing and profitability.
Some TV makers are also now predicting tighter supply later this year, and have begun to increase panel procurement, which is already encouraging panel makers to start negotiating price increases on some panel sizes. Demand for large FPD panels is expected to increase to 57 million square-meters in the third quarter of 2019, up about 10 percent from a year ago.
LCD vs OLED technology
An OLED display picture is generated by turning on and off millions of tiny individual LEDs, each forming the individual pixels of a display. Compare this to LCD, where an always-on backlight projects light through a liquid crystal, sandwiched between two pieces of glass. When the liquid crystal is excited by an electrical current, it lets the light of an individual pixel pass through like a shutter. LCD and OLED display panels both excel at delivering vibrant consumer displays, each in its own unique way.
Glass plays a very important role in manufacturing devices that use flexible OLED display panels. While flexible OLED displays use a plastic substrate rather than glass, they require a high-performance, display-quality carrier glass to stabilize the plastic substrate through the demanding high-resolution manufacturing process.
“Average new TV screen sizes are still growing at least one inch per year. Western Europe and Latin America, in particular, exceeded this benchmark in 2018. With falling LCD panel prices, consumers clearly care more about trading up in size than about spending less money. Even in Japan, where consumers have been resistant to buying large TVs, the average screen size increased year over year.”
“As both Chinese and South Korean panel suppliers are focusing on large LCD TV panels, competition between them will become more intense, pressuring the price of large LCD TV panels even further throughout 2019. When Chinese display maker, BOE’s B9 10.5G fab started its mass production in the first quarter of 2018, the industry expected that its full ramp-up would take quite a time due to a learning curve. However, it did not take as long and BOE has become the largest supplier of 60-inch and larger LCD TV panels since the end of 2018.”
“Capacity reduction and shuttering of existing FPD factories, in addition to reduced utilization rates in the first quarter of 2019, looks like a harbinger of a growing trend. With so much new capacity currently being built out, substantial amounts of uncompetitive legacy production capacity are expected to be taken off line, as the industry works to balance supply and demand. Although there are caveats about the global economy, early year optimism, and market timing, lower prices continue to spur demand expectations. As excess capacity is shuttered and demand increases, supply and demand will self-correct over time.”