FPD market overview @ Display Week 2021

Yoshio Tamura, Co-founder, DSCC, presented the FPD market overview at the ongoing Display Week 2021 Business Conference.

TV/IT/smartphone market outlook
The FPD TV set demand was +0.5/+0.4 percent YoY in 2020/2021. Remarkably, North America had a significant increase in 2020. Western Europe also increased significantly. China declined the most, even though their economy recovered earlier, than the other regions.

Shipments are expected to be up 0.4 percent in 2021 vs. +0.5 percent in 2020. The trend by region in 2021 will be the opposite vs. 2020. North America and Western Europe are expected to decline in 2021, since demand was too strong resulting from Covid-19 in 2020. On the other hand, all other regions will recover from 2020 to 2021.

Smartphone set demand was −8/+7 percent YoY in 2020/2021. The worldwide smartphone market recovered from Q3’20 with Q4’20 very strong. In 2020, China saw a decline even though their economy is recovering earlier than other regions. In 2021, almost all regions are expected to increase. Annual growth is expected to be +7 percent in 2021 vs. -8 percent in 2020.

The worldwide TV panel unit demand was −2.6 percent in 2020 and will be +0.7 percent in 2021. Panel shipment growth in 2020 was a little less than the TV set growth due to panel inventories carrying over from 2019 to 2020. The worldwide TV panel area demand in 2020 was +5.2 percent with an average size increase of +1.7”. USA increased and contributed to the average size increase in global 2020. DSCC is forecasting TV panel unit/area demand in 2021 as +0.7/+5.4 percent with 0.2/+3.2 percent in 2022.

OLED TV panel prices decreased from Q2’20. Since LGD’s China fab began mass production in July 2020, which significantly boosts capacity, OLED TV demand is expected to rise on more aggressive pricing. To raise OLED TV panel unit demand by +49 percent Y/Y in 2021, panel prices are expected to continue to decline although prices increase in Q2’21 on the narrowing price gap with LCDs. OLED TV panel cost can be reduced by China production and MMG.

IT-related panel shipments, such as monitor, notebook PC and tablets dramatically increased +14/+20/+25 percent YoY in 2020, respectively. Total IT panel shipments in 2020 was +20 percent. Demand is expected to remain strong with more growth in 2021 on WFH/LFH and the accelerated digitization of the world economy. The current driver IC shortage is impacting 2021 shipments, which may reduce the decline in 2022 due to unmet 2021 demand.

Worldwide smartphone panel fell 8 percent in 2020 vs. 3 percent in 2019. OLED saw a YoY increase of +5 percent in 2020. Rigid OLED had worst performance in 2020, down 28 percent vs. LCD at -14 percent. In 2021, we forecast the total smartphone growth to be up 7 percent with OLEDs up 28 percent. Flexible overtook rigid in 2020, helped by Apple and 5G, with 5G a catalyst for flexible due to 5G circuitry increasing thickness, weight and power.

LCD/OLED market trends
The LCD unit trend is similar to total FPD. All OLED applications grew in 2020 and are expected to continue to increase the future. Not only in OLED TV and smartphones, but also other applications like in notebook PC and smart watch, that will be increasing in the future.

The TV area will continue to have the dominant share. TV and IT-related apps increased in 2020, though TV units had a slight decline in 2020. FPD area growth will be +6/6/2/2/2 percent from 2020 to 2024. The growth in 2020 and 2021 was/is better due to WFH/LFH under Covid-19. In OLED, the two apps, smartphone and TV, are expected to increase, though other applications will also increase gradually. For LCD area demand forecast, IT panel demand has been increasing since Q2’20. TV panel shipments sharply increased in Q3’20. LCD area demand growth was +5.4 percent in 2020, and will be +5 percent in 2021.

In OLED area demand forecast, in 1H2020, smartphone demand was weak and OLED TV demand was not as good as LCD. In 2H2020, their demand increased sharply. In 2021, OLED TV and smartphone demand are expected to increase. This is due to the fact that there is much more capacity in 2021 than 2020, due to full operation of the LGD China WOLED fab.

LCD/OLED fab capacity trends
By production country, due to Korean fab downsizing, the China LCD share will increase to 61/66 percent in 2021/22 and >70 percent from 2023. China’s share will also increase up to >50 percent in OLED capacity by 2025. Both the materials and component supply chain are also moving to China.

Due to the G8.5 Nanjing/G8.6 Chengdu integration by BOE, BOE capacity is expected to increase greatly in 2021. China Star is also increasing capacity due to Samsung’s China fab integration. Due to this consolidation, BOE and China Star’s capacity share are 26 percent and 13 percent, respectively, in 2021.

LCD fabs, especially, TV-related fabs in Korea, have downsized in 2019 and 2021. Significant downsizing is expected again in 2022 due to SDC T8 EOL. It is uncertain when LGD P8 will be EOL, though we forecast it happens in 2023 or later. Both, TV and mobile OLED capacity will continue to grow. In mobile OLED, flexible capacity will benefit from Chinese subsidies. DSCC expects that OLED TV capacity will continue to increase from 2025 due to Chinese entry.

In mobile OLED substrate input capacity by supplier, SDC flexible capacity will decline due to the conversion to YOCTA/LTPO in A3 in 2021/22, but it is expected to increase again due to A4 investment from 2023. LGD flexible capacity will increase again with E6-3 and E6-4 investments from 2022.

LCD/OLED fab utilization and supply vs. demand
LCD capacity and actual input is not declining due to the delay of SDC’s T8 shutdown. LCD fab utilization will remain high in 2021, but it is expected to decrease in 2022. Fab utilization is expected to decline in 2H2021, but it is not reflecting component shortages.

In actual LCD glass inputs, BOE is the biggest and Taiwan/China Star/Korea are following in 2020. SDC SSL is shifted to China Star from Q1’21. LGD will keep the production in 2021 and is likely to continue P8 production into 2022. China will continue to increase, and BOE/China Star will grow do to their G10.5 increase.

LCD fab utilization in 2H2020 reached 88 percent and averaged 87 percent for all of 2020. We forecast it will also be 87 percent in 2021. With most LCD fabs expanding where they can and a couple of new fabs, LCD capacity will loosen, going forward, although the Korean shutdowns will provide a cushion. In mobile OLED substrate input, the top 3, SDC/LGD/BOE inputs YoY have been increasing since 2H2020. SDC was rigid in 2020, and it is much worse than 2019, but 2021 is expected to be a little better than 2019. SDC flexible utilization was almost full in 2H2020. The other flexible lines were also getting better from 1H to 2H2020. The overall flexible utilization is expected to be better in 2021, benefitting from Apple and 5G.

Mobile OLED fab utilization has been less than LCD due to aggressive investments. Rigid OLED utilization finally recovered from Q4’20 and is expected to be around 75 percent in 2021. Flexible OLED utilization started to improve from 2020 and all quarters in 2021 seem to be better than 2020.

In OLED TVs, there seems to be a gap from 2020 due to supply growth in OLED TV panel supply. 65” and 77” shares are expected to increase due to the cost gap with 55” by MMG production. The OLED TV panels were surplus in 2020, but fab utilization 1H2021 are >90 percent. OLED TV panel sizes are expanding from 55-77” to 48-88” sizes.

Mobile OLED has had a large surplus for the past three years. In 2018-2019, flexible OLED had surplus, while OLED TV fab utilization was >90 percent. In 2020, rigid mobile OLED also had a surplus due to the competition with LCD models. Mobile OLED demand will continue to increase, and surplus will improve from 2021.

LCD TV panel prices significantly increased for the past one year and may be critical for TV brands. DSCC expects that prices will go down from Q4’21, if the strong IT and TV demand will peak out. TV panels prices have been much higher than the total costs in 1H2021. The operating margins are +23-25 percent/32-34 percent in Q1/Q2’21. Even if TV prices will go down from Q4’21, the operating margins are expected to be +27-32 percent in Q4’21.