LONDON, July 12, 2022 /PRNewswire/ — Global display makers’ capacity utilization is expected to drop to 73% in 3Q22; a record low for the sector since 2012 according to the latest forecast from Omdia’s ‘Display Production & Inventory Tracker – June 2022.
LCD TV panel prices have plunged to new lows in June, as TV makers feel the pressure to continue slashing their panel demand for 2Q22 and further downsizing panel purchasing plans for 3Q22. Samsung has just made the decision to halt procurements from mid-June and avoid a high inventory in the pipeline. This decision will likely ripple across the display industry.
In response to Samsung’s strong change in the displays and components sourcing strategy and amid growing financial losses in the TV panel business, panel makers have no better choice than to cut their fab utilization rates significantly from June.
According to Omdia’s Tracker, the monthly average utilization of panel makers in June and July 2022 is expected to drop to 70% and 69% versus the total designed capacity respectively, which is the lowest level in 10 years. The previous historical low was 77% in February 2020, when oversupply issues dampened the market and just before the pandemic buoyed sales.
Quarterly average utilization in 2Q22 is expected to be record low as well, at 77%, and is projected to fall even further in 3Q22, to 73%.
Alex Kang, Principal Analyst, Omdia said: “The drop in utilization directly leads to higher fixed costs and ultimately results in elevated production costs and profit deterioration, which is why manufacturers try to avoid it at all costs. The fact that panel makers have chosen to reduce utilization despite a drop in production and profitability implies that the current price plunge is excessively steep and that panel makers are attempting to stop profitability from further deteriorating.”
Omdia is a leading research and advisory group focused on the technology industry. With clients operating in over 120 countries, Omdia provides market-critical data, analysis, advice, and custom consulting.
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