Flat panel makers likely to cut back output significantly in 4Q19

LCD panel makers are likely to scale down their output significantly starting fourth-quarter 2019 or first-quarter 2020 as panel prices are expected to continue to fall and inventory levels will remain high when a seasonal uptick is over in the third quarter, according to industry observers.

In fact, some makers, particularly those focusing on production of large-size panels, have begun implementing measures to adjust their output in the third quarter because they were operating with losses in the first half of 2019, said the sources.

While global panel demand is showing slight growth in the third quarter as compared to a quarter earlier, the sources indicated that overall capacity utilization rates remain high despite high inventory levels, which in turn will force panel prices to dip further.

Quotes for 32-inch TV panels will fall US$1 to US$34 on average in August after sliding US$2 in the previous month and 39.5-inch models will drop US$2 to US$64. And prices of 43-inch ones will suffer a decline of US$3 to US$72 on average, according to Sigmaintell Consulting.

Prices of 50-inch models will dive US$3 to US$92 in August after suffering a drop of over US$5 in the previous month. Quotes for 55-inch panels will ebb US$2 to US$107, while those of 65-inch ones will drop US$4 to US$177.

However, prices of 32- and 55-inch TV panels are likely to stop falling in September thanks to production adjustments at makers, said the sources.

But new capacities for large-size panels are likely to come out from a 10.5G line of Sakai SIO International Guangzhou and another 10.5G line of BOE Technology in Wuhan in the second half of 2019 or early 2020, which will worsen oversupply and force other players to cut back their output significantly trying to maintain a supply-demand balance, said the sources.