LCD panel prices continue to fall amid China oversupply

The LCD panel market is not likely to rebound in 2016, but if fab utilization falls later this year, quotes could climb in 2H17.

Recent reports from IHS show LCD manufacturing in China will still have a huge impact on the global market. Oversupply of the panels there is expected to continue through 2016, meaning LCD TV prices are not likely to rebound this year. In fact, the price of 32in HD LCD TV panels fell below $55, approaching the material cost of the product and already below the cash cost, resulting in a loss of depreciation costs for panel makers. The rates of 43 and 48in FHDs are expected to follow soon.

China suppliers are projected to lower their fab utilization in mid-2016, which could ease the LCD oversupply in the second half of 2017. For now, IHS lowered its demand forecast for LCD TVs in 2016 to 224 million units, or 3 million less than previously estimated.

China subsidies for startups are the likely culprit of the oversupply. Although with a negative impact on the profit margins of panel suppliers, this presents a good opportunity for those whose products rely on LCD screens. However, LCD TV demand has not grown as quickly as expected in emerging economies such as Russia and Brazil, exacerbating oversupply.

There are some bright spots for panel makers, though. Shipments of 4K TVs have been meeting expectations, with an estimated 31.6 million units delivered in 2015. That is expected to increase to 54.8 million units in 2016. The cost of 4K screens, however, is about twice as much as that of 1080p on a price-per-inch basis. While sales of these TVs are on the rise, it might be difficult to convince someone of the need to upgrade to a higher definition screen. For this reason, 4K panels are not a big focus in China. Regardless, LCD panel makers' pain is the gain of those sourcing panels and TVs at lower quotes.

See a comparison table of selected TFT-LCD module suppliers on GlobalSources.com