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The overall production capacity for large-size LCD panels rose above the expected level in the first half of 2017 despite seasonal headwinds...
Major panel makers expanded their Gen-8.5 production capacity during 2016 in response to the rising demand for larger TV panels. The increased production in the large-size segments helped consume the overall panel capacity and increased the average size of TV panels by 2.2 inches to 43.6 inches. Shipments of TV panels by area therefore actually increased by 6.5% annually. WitsView expects the average size of TV panels to increase again in 2017.
LG Display (LGD) maintained its position as the leading supplier of TV panels with 52.94 million units shipped in 2016, a 4.3% drop versus 2015. “Last year, LGD invested heavily in expanding the capacity of its Gen-8.5 fab in Guangzhou, China,” said Iris Hu, research manager of WitsView. “The panel maker also adjusted the product mix for its Gen-8.5 capacity as a whole, expanding the share of the 55-inch production while reducing the share of the 32-inch single-cut production.”
Though the product mix adjustment resulted in an annual decline in unit volume, shipments by area rose 5.3% compare with 2015. LGD moreover posted significant increases in large-size segments during 2016, with the combined shipments of 60- and 65-inch products soared by 98% annually. This reflected the continuing trend of demand shifting towards larger sizes.
Samsung Display (SDC) shipped a total of 46.8 million units of TV panels in 2016, representing an annual decrease of 8.1%. Though SDC was second in the ranking, its TV panel shipments fell significantly because of the challenges involving the adoption of the Black Column Spacer (BCS) technology during the first half of 2016. Furthermore, SDC closed its LCD fab L7-1 at the end of last year with the intention to refurbish the plant for the manufacturing of AMOLED panels used in smartphones.
“This move not only caused decline in TV panel shipments for SDC but also created anxiety over the supply of panels sized 40 to 43 inches,” Hu pointed out. “The urgency to stock up on products belonging to this size range appeared last year and will continue well into this year.”
BOE Technology (BOE) posted an annual increase of 22.4% in its TV panel shipments for 2016, amounting to 43.64 million units. The panel maker achieved impressive shipment growth for the second consecutive year and surpassed Innolux to take the third place in the annual ranking for the first time. Last year, BOE significantly increased the capacity of its Gen-8.5 fab in Chongqing, China. While some of the added capacity in the Chongqing plant was for notebook panels, much of it was used to raise the share of 49- and 55-inch TV panels in the overall product mix. BOE’s shipments by area therefore grew considerably as well, with the annual rate reaching 33.5%.
TV panel shipments from Innolux in 2016 fell by 19.3% to 41.73 million units. Innolux’s TV panel ranking tumbled from second place in 2015 to fourth place for last year because there was no major order for its 23.6-inch panels and the February earthquake in southern Taiwan interfered with the company’s original production and shipment plans. However, Innolux has increased the share of large-size segments in its product mix so that it can main profitability with limited production capacity. Hence, Innolux’s TV panel shipments by area fell by just 6.3% compared with 2015.
China Star Optoelectronics Technology (CSOT) saw its TV panel shipments shot up last year after the panel maker finished expanding the production capacity of its second Gen-8.5 fab for the annual cycle. CSOT’s shipments grew 29.7% annually in 2016 to reach 33.09 million units. In addition to raising its Gen-8.5 capacity, CSOT since last year also started to focus on shipping large-size products. Thus, shipments of its 49- and 55-inch panels took off, respectively registering annual increases of 126% and 115% in unit volume. CSOT moreover posted the largest increase in shipments by area compared with other TV panel suppliers with annual growth rate at 55.3%.
TV panel shipments from AU Optronics (AUO) reached 27.22 million units in 2016, amounting to a marginal increase of 0.2% in unit volume but a significant increase of 10.7% in area compared with the prior year. AUO managed to raise the production capacity of its fab L8B, which is assigned to make panels for large-size TVs and special high-end displays. AUO moreover boosted TV panel shipments by changing the product mix of its Gen-6 TV panel capacity. More weight was given to the 65-inch products, and this in effect reduced the share of Gen-6 capacity used for the 32- and 39-inch products. Consequently, AUO’s unit shipments increased slightly but area shipments posted a much larger annual gain.
WitsView estimates that TV panel shipments for 2017 will reach 257.8 million units. Hu noted that the supply for products in the 40- to 45-inch range will be tight through this year as South Korean panel makers phased out a few of their fabs. Furthermore, Sharp has stopped supplying panels from its Gen-10 fab in Sakai, Japan, to competing brands. Samsung Electronics, which is Sharp’s largest client and accounts for 40% of its LCD panel shipments, will be forced to search for other supply sources.
WitsView anticipates that Samsung Electronics will be demanding 65- and 75-inch panels in the near future because it no longer can obtain the usual 60- and 70-inch products from Sharp. Other TV brands will also be compelled to use larger panels. Consequently, the average size of shipped TV panels in 2017 is projected to grow by nearly 2 inches to 45.4 inches, and the annual increase in shipped area for this year is estimated at 7.6%.
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