Display panel manufacturers’ fab utilization rate is expected to slow in the second quarter from above 80 percent in the first quarter of 2025 due to weakness in demand. As a result, makers for TVs, PCs, and other display products are becoming more cautious in their panel procurement strategies, according to Omdia’s latest report.
A key factor behind this shift is the growing uncertainty surrounding the imposition of new U.S. tariffs targeting a broad range of display application products, including televisions, personal computers, and smartphones. These tariffs could significantly impact demand in the US consumer electronics market that will reach $261.929 billion by 2030 from $185.8 billion in 2024.
Brands and original equipment manufacturers (OEMs) are already scaling back their panel orders prompting panel makers to adjust production strategies accordingly.
Omdia projects a noticeable dip in fab utilization rates in the coming months, forecasting a decline to below 80 percent as early as April 2025, and a drop to 76 percent in May. Omdia’s earlier outlook predicted April utilization at 82 percent and May at 78 percent. The new forecast also factors in planned extended production breaks by some Chinese TFT LCD manufacturers during the May Labor Day holiday, which are expected to further reduce utilization — potentially down to 75 percent.
In the fourth quarter of 2024 (4Q24), panel makers operated their facilities at 81 percent to 83 percent capacity. This was largely driven by China’s “swap old for new” subsidy initiative, aimed at stimulating domestic consumption by encouraging consumers to replace older televisions with newer models. The program boosted demand for LCD TV panels, especially for larger formats of 75 inches and above.
In addition, Chinese TV manufacturers have been increasing production and accelerating shipments to the U.S. in an effort to get ahead of potential tariff hikes. This front-loading strategy led to a short-term spike in demand in early 2025, but it appears unsustainable as geopolitical and economic uncertainties mount.
These conditions have led to a reassessment by PC and TV set makers, who are now actively reducing their panel inventories. With panel prices having remained relatively high over the past six months, downstream brands and OEMs are expected to push for price reductions to help absorb the added costs of potential tariffs.
“With demand slowing and uncertainty around tariff impact, panel makers are shifting from their original high capacity utilization mode back to the production-to-order mode. This strategy should help stabilize panel prices amid weakening demand,” David Hsieh, Senior Director of Display Research at Omdia, said.
Baburajan Kizhakedath
