Display Fab Utilization Continuing Strong in 2H 2020
After a slowdown in Q2 2020 that was less severe than expected, display industry fab utilization recovered in Q3 and is continuing at high levels in Q4, according to the latest release of DSCC’s Quarterly All Display Fab Utilization Report, issued this week. In Q3 2020, total TFT input for all display makers was up 9% Q/Q and Y/Y at 76.4 million square meters, and in the current Q4 2020 we expect total TFT input to be down less than 1% Q/Q up 10% Y/Y at 76.1 million square meters.
The report details capacity, TFT input, and utilization for every flat panel display fab in the industry, more than 100 fabs in all, and includes pivot tables to allow segmentation by supplier, country, TFT fab generation, backplane, frontplane or substrate type. The report provides historical utilization back to Q1 2018 and a forecast by month for 2020.
The COVID-19 induced slowdown started in April, affecting all regions except Taiwan with particularly sharp slowdowns in Japan and Korea, as shown in the first chart here. Utilizations increased in all regions in Q3, and worldwide utilization increased from 82% in Q2 to 87% in Q3. We expect a modest slowdown in utilization in Q4 in China and Taiwan, and a more substantial slowdown in Korea as SDC looks to shut down its LCD lines. The Korea slowdown may be averted, however, as in its Q3 earnings call Samsung indicated that it was studying the possibility of extending LCD panel supply short-term by using the capacity of the lines that are not being converted to QD display.
TFT Monthly Fab Utilization by Country, 2018-2020
A view of TFT input shows the extent that China has taken over the industry in just the last two years, and how this process is continuing in 2020. In Q1 2018, China represented 39% of total industry TFT input on an area basis, but by Q3 of 2019 China was larger than all other regions combined, and by the end of this year China will be 57% of all industry TFT input.
Quarterly TFT Input by Country, 2018-2020
Looking at the picture by main application and display technology, we see that mobile OLED fabs are consistently run at much lower utilization than LCD fabs. This is largely driven by the low UT% at Samsung’s flexible OLED lines, but BOE’s flexible OLED lines have also run at very low UT% in 2020.
In contrast, up until 2020 utilization of LGD’s OLED TV lines have been the highest UT% in the industry for any application, as LGD was effectively constrained by capacity before they have started to ramp capacity in their Gen 8.5 fab in Guangzhou, China. With the additional capacity from Guangzhou, LGD’s OLED TV panel business is no longer capacity constrained.
UT% for flexible OLED has followed a consistent pattern in recent years, with utilization low in Q1 and rising to a peak in Q3 with a slowdown in Q4. In 2020, Apple’s product launch has been delayed compared to prior years, so demand for flexible OLED panels will help sustain utilization in Q4. Utilization of rigid lines has fallen in 2020 compared to 2019, as rigid OLED has lost share, squeezed between inexpensive LTPS LCD panels at the low end and flexible OLED panels at the high end.
Quarterly TFT Utilization by Display Technology, 2019-2020
A view of TFT input by Gen size shows the slow erosion of the once-dominant position of Gen 8.5, as the two Korean giants shut down some of their LCD capacity in this gen size to convert to OLED. Gen 8.5 represented 55% of total industry TFT input in Q1 2018, before the big Gen 10.5 fabs started ramping. Gen 8.5 TFT input rebounded in Q3 2020 but in Q4 will represent less than 42% of the industry. Meanwhile Gen 8.6 and Gen 10.5 TFT input has been increasing rapidly with multiple expansions ramping, and both of these sizes are likely to surpass Gen 6 in 2021.
Quarterly TFT Input by Gen Size, 2018-2020
The stronger utilization across the industry, as well as the increases in LCD TV panel prices, led to improved profitability for flat panel display makers in Q3. With utilizations remaining high in Q4, we can expect a dose of holiday cheer for panel makers at year-end.