LCD PANELS WILL STILL DOMINATE THE MARKET IN THE MEDIUM AND LONG TERM THE CYCLICAL PROPERTIES INITIATE CHANGES

In recent years, the global LCD panel industry has undergone significant changes in market competition. As of 2023, there are now eight major large-size LCD panel manufacturers globally, down from ten. Mainland China's LCD panel manufacturers have gained a market share of over 70% in the global market. Despite a lack of clear improvement in terminal retail demand, LCD panel prices have been steadily rising since February.

Amidst these transformations, industry practitioners are contemplating the long-term value of the LCD panel industry. Our perspective suggests that over the next 5-8 years, LCD panels will remain the mainstream technological product in the display industry, and the cyclical nature of LCD panels is diminishing.

THESE INSIGHTS CAN BE DIVIDED INTO SIX KEY POINTS

Stabilizing Supply Capacity of LCD Panels:

Expansion of LCD panel capacity is reaching its conclusion, and lower generation lines are being phased out. Investments in new production lines by Chinese mainland LCD manufacturers are slowing down, with emphasis on expanding existing lines.

Closure of the G6 plant with a monthly capacity of 90K large panels by CEC Panda in late 2022, indicating reduced production.

Competition and Exit of Japanese and Korean Manufacturers:

Samsung has sold its G8.5 production line to China's CSOT and is transitioning its Korean LCD lines to QD OLED. LGD's Korean P7 G7.5 plant with a monthly capacity of 160K large panels was closed in Q4 2022. 

Taiwanese manufacturers Innolux and AUO are focusing on differentiated applications and products due to market constraints. Shift Towards Differentiated Applications：

Taiwanese panel manufacturers Innolux and AUO are transforming their product portfolios and application scenarios. Both manufacturers' large panel G6 lines are expected to shift to differentiated application products. Demand for Large-Size Applications: Despite stable terminal quantities, the increasing average size is leading to an annual compound growth rate of over 3% in display area from 2020 to 2030.

Large-size TV panels are in demand, with China's market favoring 65-inch and larger sizes.

Stability of LCD Technology:

LCD remains dominant in TV, monitor, laptop, and tablet applications.

OLED's cost limitations and performance similarities to Mini LED LCDs reduce its threat. LCD maintains a strong presence due to cost-effectiveness and performance similarities with OLEDs.

Changing Competitive Landscape and Strategies:

China's TV panel manufacturers control over 70% of global shipments, enhancing their influence. Panel manufacturers are shifting from market share pursuit to profit maximization, aiming for balanced supply and demand. The industry's cyclicality is decreasing due to improved supply-demand balance.