LCD Capex Up, OLED Capex Down in Latest DSCC Equipment Spending Report Reflecting Market Conditions
DSCC’s latest Quarterly Display Capex and Equipment Market Share Report reveals a surge in LCD equipment spending to respond to dramatically improved market conditions in the LCD market. DSCC sees LCD revenues rising 32% in 2021 to $112B on strong unit and area growth with prices and profitability rebounding to or even exceeding the 2017 levels. With LCD suppliers able to sell everything they can make at attractive margins; it should be no surprise that most LCD manufacturers are looking to expand capacity. However, unlike previous upturns when many new fabs were built, in this upturn panel suppliers are looking to stretch their capacity through smaller investments, simplifying their processes, debottlenecking, etc. Having said that, we still see two new G8.6 mega fabs being built. Over the last three months, we have added or expanded 14 different LCD investments. The result versus last quarter is a 10% or a $2.2B increase in 2020-2024 LCD spending from $21.8B to $24B. As shown below, our latest 2021 LCD equipment spending forecast is up 15% versus last quarter’s forecast to $10B, with 2021 LCD equipment spending up 125% versus 2021. In addition, 2022 was upgraded by 28% to $3.5B.
Latest LCD Equipment Spending Forecast vs. Last Quarter’s (Install Basis)
Although there is a healthy upgrade in LCD equipment spending in 2021 and 2022, the outlook for 2022-2024 spending is still significantly lower than in previous years, resulting in tighter capacity and slower price reductions in the next downturn. In addition, with Korean LCD suppliers expected to reduce their LCD capacity and convert to potentially higher margin OLEDs, the outlook for LCD pricing and profitability looks quite healthy, which may result in even more equipment spending, especially as miniLEDs gain acceptance.
With panel suppliers prioritizing LCDs, OLED equipment spending fell versus our previous forecast. Some lower-tiered Chinese mobile OLED manufacturers are struggling with their utilization, profitability and financing resulting in a number of fab delays and one cancellation. In addition, OLED TV spending in China was also delayed as manufacturers increase their emphasis on miniLEDs which can significantly boost performance and raise LCD panel prices/revenues/profitability. As indicated, OLED equipment spending on an install basis is expected to decline double-digits in 2021, 2022 and 2023, but surge in 2025 on investment delays. Total 2020-2025 OLED equipment spending on an install basis is expected to fall 2% or $1.2B versus our last forecast to $49B.
Latest AMOLED Equipment Spending Forecast vs. Last Quarter’s (Install Basis)
Total display equipment spending for 2021 is either up or down depending on whether you are looking at it from a delivery or completion of install perspective. It is up 39% on an install basis to $16.6B, which is how most Japanese equipment companies recognize revenues. On the other hand, it is expected to be down 24% to $12B on a move-in basis which is how equipment companies in other regions recognize revenues. For 2020-2025, the growth will be similar through, up ~1.5% to $73B on an install basis and $70B on a move-in basis.
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