According to the latest Credit Suisse report, TV LCD display panel prices are expected to pick up in early 2020, and the upward cycle will continue for a full year to 2021.
Credit Suisse observes that Japanese and South Korean industry players, which account for 6% of the world's market, have shifted their product structure quite rapidly, their production capacity has continued to shrink, and they have gradually withdrawn from the low-margin product market. Such a situation will not only last for a quarter or half as originally expected. However, Credit Suisse also stressed that the LCD display market is still pessimistic, and even in 2021 there will still be oversupply.
Overall, overall TV LCD display panel shipments will decline 4% year-on-year to 276 million units in 2020, of which 32-inch TVs will quickly reduce production due to lack of profitability, and entry-level TV sizes will be directly increased to 40-43 inches The volume of goods will grow by 11% year-on-year, and even with the support of the 8th generation factory, in the US market, entry products will be as large as 50 inches.
However, in the second quarter of this year, Credit Suisse expects 55-inch TV LCD display panel shipments to decrease by 10% year-on-year to 41 million units. Although Chinese second-tier players such as CLP Panda and Huike will expand production of 55-inch products, due to production efficiency Insufficient impacts such as reduced production at the Korean factories will have a greater impact, and the overall output will still decrease. For larger sizes, such as 65 and 75 inches, they will continue to be exported by the 10.5 generation factories, mainly for the needs of the Chinese and American markets, especially the orders from BOE and TCL Huaxing, which deserve the most attention.
At present, large LCD display panels over 65 inches account for nearly 10% of the overall market, and this year it is expected to increase to 16%, reaching 45 million pieces. And the technology gap of Chinese players in this market is gradually narrowing. Although the high-end specifications, such as wide color gamut, high dynamic range, high refresh rate, narrow bezel and other technologies, China still has a gap. However, this year's consumer budget for the panel has not increased, and cost performance will still be the main consideration. Chinese manufacturers are expected to continue to expand their market share in the future.
Of course, this is good news for the relevant supply chain as a whole. Currently, Credit Suisse has raised the ratings of related stocks such as BOE and Innolux to better than the broader market. However, it is worth noting that Credit Suisse is still relatively pessimistic about the prospects of AUO, and believes that its stock price has limited upside potential, while LGD also maintains a neutral rating due to its too weak balance sheet.