TV Panel Prices Increasing in Q3
The supply/demand situation in the display industry is more dynamic than ever amidst the disruptions from the COVID-19 pandemic and the associated economic impact. With some new information, we are updating our data and forecast for TV panel prices; we’re seeing prices slightly higher in June and expect a price increase in Q3, which will be welcome news for beleaguered panel makers.
The first chart shows our latest TV panel price update. The industry saw a brief price bump in Q1 after the two Korean panel makers announced capacity cuts, but that price increase was cut short by the COVID-19 pandemic. Prices in Q2 dropped back down to roughly the same levels as Q4 2019, with certain sizes hitting all-time lows and other sizes slightly higher than their Q4 2019 trough. Starting in June, we are seeing another price bump, bringing prices back to roughly the same levels as Q1 2020.
We now expect prices to increase in Q3 for all sizes of TV panels except 75”, with the strongest gains (in percentage terms) in the efficient sizes made on Gen 8.5 fabs: 32”, 49”/50” and 55”. We continue to expect that the long-term downward trend will resume in Q4 and TV panel prices will end the year at new all-time lows, but the situation remains dynamic, and with the pandemic raging it seems like an eternity between now and the end of the year.
TV Panel Prices January 2019 –December 2020
The only exception to the Q3 price increases, as noted, are 75” panels, which are made efficiently on Gen 10.5 fabs. These largest TV panels sell at a premium price in terms of area, as shown in the next chart here. The gap in price per square meter between 75” and 65” is still very wide at $45 per square meter in June and is expected to decline only slowly in the 2nd half to $42 in December 2020, when it will represent a 32% difference. Viewed another way, Gen 10.5 fabs can generate $1632 of revenue per substrate making 75” panels 6-up at June prices, compared to $1240 of revenue making 65” panels 8-up or $1152 making 43” panels 18-up. Thus the big fabs still have a generous incentive to make 75”, which will lead to continued price pressure on those larger sizes.
Monthly Area Prices per Square Meter for TV Panels, October 2016 – December 2020
The bellwether 32” TV panel typically shows the fastest drops to the lowest area prices in times of oversupply, and we show that pattern repeating itself in Q2 and Q3. In May 2020, 32” panel prices matched their all-time lows, but these panels will get a 9% increase Q/Q in Q3, before falling again in Q4.
Looking out a bit further, the picture for 2021 will depend heavily on the path of the COVID-19 pandemic in the second half of 2020, along with the corresponding economic impact. The supply/demand picture looks better for LCD panel makers in 2021, though, since LCD capacity will be lower in 2021. Next year has the potential for rising LCD TV panel prices, as long as COVID-19 does not extinguish the long-term growth rate of TV.
After the industry recognized an average TV panel price increase of 5.4% Q/Q in Q1, we are now seeing prices fall in Q2 2020 by an average of 3.6% Q/Q. In Q3, we continue to see different results for the industry depending on screen size. Sizes less than 65” are expected to have a price increase in Q3 averaging 3% Q/Q, while 65”/75” prices get an average 1.7% price cut Q/Q. The total industry average comes out to an increase of 1.7%, but the impact on panel makers will likely vary based on their screen size mix. In Q4, we expect all TV panel sizes to get a price decrease, ranging from 2% to 5% depending on size, with an average of 3.7%.
TV Panel Price Index and Y/Y Price Declines, January 2015 – December 2020
The final chart here takes the longer-term view with data back to 2015. Our TV price index is set to 100 for prices in January 2014, and as indicated in the chart was nearly at the same level in the last industry peak in the spring of 2017, but has fallen steadily with a few interruptions since then. As of May 2020, the index reached an all-time low of 42.0, and while it will improve modestly in Q3, we expect it to reach a new all-time low in Q4. The Y/Y price line shows a more hopeful milestone, as we expect that the Y/Y panel price will have a 1% increase in September and October 2020. This will be the first Y/Y panel price increase in exactly three years, since September 2017. For 2021, panel makers can look hopefully to the example of the last industry cycle, where prices increased nearly 50% Y/Y. In the COVID-19 era, though, 2021 seems like the distant future.