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Devices

TelecomTV TRACKER

Sourced by TelecomTV's TRACKER platform
from IHS Technology Press Releases

Devices

Large-Area Profit Margins for Thin Film Transistor Liquid Crystal Displays Forecast to Plunge, IHS Says

Via IHS Technology Press Releases

Sep 11, 2015

Rising inventories and panel-price erosion are expected to squeeze profitability, starting in second half of 2015

KYOTO, Japan (September 14, 2015) – Large-area thin film transistor liquid crystal display (TFT LCD) profit margins reached 10 percent in the first quarter (Q1) of 2015, their highest level since the first half of 2010. However high factory utilization rates at leading panel makers, and swelling inventories at set makers, are now pressuring prices and margins downward. According to IHS Inc. (NYSE: IHS), the leading global source of critical information and insight, large-area TFT LCD profit margins are forecast to fall to zero percent in the fourth quarter (Q4) of this year.

Image

Based on the latest IHS Display Supply Demand & Equipment Tracker , large-area TFT LCD displays have remained profitable since the end of 2012. However, this year, end-market demand for TVs, monitors, notebooks and tablets has weakened significantly. The demand outlook has deteriorated, due to a variety of product and economic reasons. In particular the rise of the US dollar against most other global currencies has caused local prices for a variety of consumer electronics products in many countries to rise, stifling demand in those regions.

“Despite declining demand, panel manufacturers have maintained high utilization rates well above 90 percent at their larger glass fabs since last year,” said Charles Annis, Senior Director at IHS.

“Even with recent price declines, many large panel sizes currently sell at marginal profits,” Annis said “At least for now, panel makers have decided to keep utilization high and minimize overhead costs, in order to chase as much profit as possible while they are still able to. The downside to this strategy is that panel inventories at set-makers have ballooned, widening the gap between TV panel shipments and TV set shipments.”

As this excess inventory is sold down, panel prices are also expected to decline rapidly. Large-area display profitability will likely follow the same trajectory. At the same time, a substantial number of new eighth-generation (Gen 8) factories are currently ramping up production. Dedicated capacity for large-area displays will grow at a rate of 6 percent in 2015 and 8 percent in 2016, the highest rates in several years.

“Growing concerns about the global economy and its effect on end-market demand --combined with high utilization rates, inventories at set makers and increasing capacity -- will likely weigh heavily on large-area display profit margins for the remainder of 2015 and even well into 2016,” Annis said.

The IHS Display Supply Demand & Equipment Tracker covers metrics used to evaluate supply, demand, and capital spending for all major flat panel display (FPD) technologies and applications. For information about purchasing this report, contact the sales department at IHS in the Americas at (844) 301-7334 or AmericasLeads@ihs.com; in Europe, Middle East and Africa (EMEA) at +44 1344 328 300 or technology_emea@ihs.com; or Asia-Pacific (APAC) at +604 291 3600 or technology_APAC@ihs.com.

Related Topics
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This content extract was originally sourced from an external website (IHS Technology Press Releases) and is the copyright of the external website owner. TelecomTV is not responsible for the content of external websites. Legal Notices

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