Major LCD panel makers forecast oversupply will become new normal
TAIPEI, NNA - Major Taiwanese liquid crystal display panel maker AU Optronics Corp. forecasts oversupply in panel products will persist in years to come after the launch of new production lines in China since the second half of 2018.
Sales of LCD panels in 2019 are likely to slide due mainly to macroeconomic uncertainty and a lack of stimulus from sports events, but the overall square meters sold are expected to continue growing, the Taiwanese company said Tuesday.
The world’s second biggest supplier, South Korea’s LG Display Co., made a similar projection Wednesday that the LCD industry this year is expected to see a double-digit increase in output as a result of Chinese panel makers’ investments. That caused a decline in LG’s average selling price per square meter, or ASP, from the fourth quarter of 2018, it said.
Both firms expect declines in shipments in the first three months of this year due to seasonality and weakening demand. LG anticipates a high-single-digit percentage drop in shipments in square meters this quarter, the same as AUO’s projection for its large-sized panels. But demand for ultra-large and high-specification panels remains steady this year, they said.
The global economic slowdown, the U.S.-China trade row and currency depreciation in emerging economies will weigh on AUO’s operation, but the Taiwan firm will exert efforts to minimize the impact, Chairman Paul Peng told investors.
Facing the deterioration in market conditions, LG Display is speeding up a shift to an Organic Light Emitting Diode-focused business. It plans to ship 3.8 million OLED TV units this year, which will account for 30 percent of total revenue from the television operation.
In specific segments, AUO expects a double-digit year-on-year growth in panel shipments for gaming devices and to double shipments of high-end Low Temperature Polycrystalline Silicon panels for laptop computers compared with the previous year.
In the TV and information technology segment, AUO will enhance 8K ultra high-definition LCD panels for 75- and 85-inch TVs as demand for ultra-large panels remains strong. Total sales of large-sized panels measuring 75 inches and more in the global market will outperform by 40 percent this year compared to the previous year, the firm said.
In the fourth quarter of 2018, AUO swung to an operating loss of 1.45 billion New Taiwan dollars ($47.2million). Its panel shipments grew 1.8 percent on year to 6.7 million square meters, but ASP fell 7.5 percent from a year earlier to $345.
“An additional output capacity of larger generation panels has added tremendous pressure on panel price,” Pens said. “Oversupply mainly attributed to the drop.”
LG’s fourth-quarter operating profit increased more than six-fold to 279 billion won ($260 million) from 45 billion won a year earlier.
It has geared up to focus on high-value-added products, while seeing growing shipments of new products in IT and small- and medium-sized panel segments, which have a higher ASP, it said in a statement.