Panel Equipment Market Analysis In 2019: LCD Investment Reduction OLED Panel Investment Continues To Climb

- Apr 03, 2019-

The flat panel display industry entered the peak of capacity expansion in 2016, and the panel factory invested heavily in flexible AMOLED panel production lines and 10.5 generation/11 generation LCD panel production lines. According to IHS Markit, this wave of investment is driven by local governments in the mainland. Through financing, land subsidies, tax breaks, and even direct financial subsidies, a large number of factories are built around the country. In 2017, the investment amount of LCD panel and OLED panel total equipment reached a high of 20.2 billion US dollars. It began to decline year by year in 2018. The investment in panel equipment in 2019 is estimated to be reduced to 16 billion US dollars. Mainly due to the decrease in LCD investment, the investment amount of OLED panel continued to rise, and the investment amount in 2019 was about 8 billion US dollars.

IHS Markit said that the new Continental Panel plant was put into mass production in 2018, and the new capacity was opened to make the panel supply and demand seriously unbalanced. Although the new AMOLED factory in mainland China has not yet achieved a certain yield, from the calculation of equipment capacity, the capacity area of AMOLED panel in 2019 is more than 40% compared to the demand area. The market demand cannot fully decompose the production capacity. It is expected that the capacity utilization of AMOLED panel factory will be utilized. The rate will be low for a long time.

The low utilization rate of the mainland panel factory and the poor profitability performance have led the panel factory and the local government in the mainland to adjust the investment plan of the new plant. Considering that the growth rate of panel demand is gradual, South Korea's panel maker Samsung Display and LGD have also suspended investment in the 6th generation of flexible AMOLED panel new plants. The decline in investment in panel equipment in 2018 and 2019 was mainly due to the reduction in investment in LCD panels.

In addition, IHS Markit pointed out that part of the investment in panel equipment in 2019 was partly due to the transformation of LCD panel capacity into AMOLED panels. For example, JOLED, Samsung Display, etc., all plan to transform the LCD production line into OLED-related equipment. With the investment in new capacity, it is expected to further stimulate the growth of the AMOLED TV market.