Global display panel manufacturers are set to significantly reduce their fab utilization rates in October 2024 in response to declining LCD TV panel prices, Omdia report said.
The utilization rate is expected to drop by 14 percentage points month-on-month, falling to 68 percent. This reduction will be led by China’s top LCD makers, BOE, China Star, and HKC Display, who plan to temporarily halt production during the National Day holiday, cutting utilization to 61 percent during October.
The move comes as the Chinese panel giants attempt to stabilize falling prices by controlling production levels. Together, these three manufacturers dominate the market, holding over 60 percent of the global LCD TV panel market by area in the first half of 2024. Their collective production cuts are expected to have a significant impact on the overall supply chain and pricing trends.
Falling Prices and High Inventories
The decision to lower fab utilization is aimed at countering a consistent drop in LCD TV panel prices, which are expected to continue declining until mid-Q4 2024. By reducing output, manufacturers hope to either halt or mitigate further price declines. This follows a similar approach taken earlier in the year when panel makers reduced their utilization rates to 56 percent in February, successfully boosting panel prices in the process.
In addition to falling prices, the move is seen as a way to manage rising inventory levels. TV manufacturers are expected to scale back aggressive year-end promotions due to weaker-than-expected sales during China’s major 618 shopping festival and global sports events, compounded by rising costs, including those of LCD TV panels.
Future Outlook
Omdia’s Principal Analyst, Alex Kang, notes that panel makers continue to follow a production-to-order strategy, producing panels only after receiving confirmed orders.
There is a possibility that panel makers will implement significant production control when panel prices are set to drop, or inventories are about to rise. Another round of utilization cuts could take place during the Lunar New Year holiday in 2025, further extending the production control strategy into the new year.
