2019 Panel Equipment Market Analysis: LCD Investment Decreases, OLED Panel Investment Continues To Rise

- Jan 19, 2020-

The flat panel display industry entered the peak of capacity expansion in 2016. Panel makers have invested heavily in flexible AMOLED panel production lines and 10.5 / 11 generation LCD panel production lines. IHS Markit said that the drive for this wave of investment came from mainland local governments. Through financing, land subsidies, tax deductions, and even direct funding subsidies, a large number of factories were established in various places. In 2017, the total investment in equipment for LCD panels and OLED panels reached a high of 20.2 billion U.S. dollars, which began to decline year by year in 2018. The investment in panel equipment in 2019 is estimated to be reduced to 16 billion U.S. dollars. Mainly due to the decrease in LCD investment, while the amount of OLED panel investment continued to rise, the investment amount in 2019 is about 8 billion US dollars.

IHS Markit said that a large number of new mainland panel plants were put into production in 2018, and the opening of new production capacity caused a serious imbalance in the supply and demand of panels. Although the new AMOLED factory in mainland China has not yet reached a certain yield rate, but from the calculation of equipment capacity, the area of AMOLED panel production in 2019 is more than 40% compared to the demand area. The market demand cannot completely eliminate capacity. The rate will be low for a long time.

The low capacity utilization rate and poor profitability of mainland panel factories have caused panel factories and local governments in the mainland to start adjusting investment plans for new plants. Considering that the growth rate of panel demand is flattening, South Korean panel makers Samsung Display and LGD have also postponed investment in the new generation of flexible AMOLED panel makers. In 2018 and 2019, the decline in investment in panel equipment investment was mainly due to the shrinking investment in LCD panels.

In addition, IHS Markit pointed out that part of the investment in panel equipment investment in 2019 will come from the transformation of LCD panel production capacity to AMOLED panels. For example, JOLED, Samsung Display, etc., are planning to transform LCD production lines and invest in OLED-related equipment. With the new capacity investment, it is expected to further stimulate the growth of the AMOLED TV market.