LCD TV Panel Prices Continue to Fall in January
LCD TV panel prices, which peaked in summer 2021, fell through the second half of the year and are continuing to fall in the new year. The pace of price decreases is slowing, and we expect that pattern to continue through the first quarter, but prices have already given up most of the gains that they made in the long upcycle of 2020-2021.
In our updates in the summer of 2021, we referred to a series of events that suggested slowing demand and increasing supply, and nothing in the second half of the year has disrupted this outlook. The increasing panel prices led to an unprecedented increase in TV prices in the US and around the world, which hindered demand. Inventory is now more than sufficient across the LCD value chain from panel makers to retailers, which acts as a headwind for panel prices (or a tailwind for price declines!).
The first chart here highlights our latest TV panel price update, showing both of the biggest price increases in the history of the flat panel display industry, from May 2020 to June/July 2021 and then the fastest price decreases in the industry in the autumn of 2021. All sizes of panels have been at lower prices Y/Y from November.
LCD TV Panel Prices January 2020 –March 2022
In December, prices for all TV panel sizes fell, and for the second month in a row, the largest percentage declines occurred in the two sizes that are optimized on Gen 8.5/Gen 8.6 fabs. Prices for both 49”/50” panels and 55” panels declined by more than 10%, while both smaller and larger sizes had single-digit price declines M/M.
The fourth quarter of 2021 saw the biggest Q/Q price declines in the history of the flat panel display industry. Price declines ranged from 17% on 75” panels to 41% on 32” panels, with the general pattern of larger price declines for small sizes and vice versa. Across the seven sizes we track, the Q4 price declines averaged 32”.
Although the declines are slowing down in Q1, they are still severe for panel makers. We expect Q/Q price declines in Q1 2022 to range between 10% and 23%, with the biggest decreases for 49”/50” and 55”, and to average 15%.
As we look at pricing on an area basis, we are now seeing that all sizes 55” and below seem to be equally commoditized and area prices for all these sizes are converging. In January 2022, 55” are the lowest priced panels on an area basis by a narrow margin at $134 per square meter, but all the sizes below 65” are in a narrow range.
Monthly Area Prices per Square Meter for TV Panels, January 2018 – March 2022
While prices have converged for all the smaller size panels, 65” and 75” panels have a premium on an area basis. For January 2022, 65” panels sell at a premium of $26 or 19% over 55”, and 75” panels have a premium of $50 or 37%.
Panel makers with Gen 10.5 capacity (BOE, CSOT and Sharp SIO) are at a relative advantage in the current oversupply environment.
The last chart here shows our TV price index, set to 100 for prices in January 2014, and the Y/Y change of LCD TV panel prices. Our index increased from its all-time low of 42 in May 2020 to 87 in June 2021, but prices already declined to 47 in November. We now expect the index to decline to 41 by the end of Q1, 47% lower than March 2021 and representing an all-time low for LCD TV panel prices (and making one of our ten predictions for 2022 wrong only a week after it was made!). Although we don’t expect every screen size to hit all-time lows in Q1, 75” panels have already hit an all-time low in January.
TV Panel Price Index and Y/Y Change, January 2015 – March 2022
With the COVID-19 demand surge assisted by shortages in glass and DDICs, we saw a historic year of increases in panel prices, and panel makers post their most profitable quarter ever in the second quarter of 2021. Profits declined in Q3 but not by much, and the third quarter of 2021 was the second-best quarter ever for panel maker profitability, surpassed only by its predecessor. Despite the severe price declines in Q4, we continue to expect that panel makers will set a record for full-year profits when they report the results for 2021.