LCD Panel Prices Rebound After 33 Months, Signaling Display Revival

[Asia Economy Reporter Changhwan Lee] LCD TV panel prices have rebounded for the first time in about three years since the beginning of the new year. As prices of large LCD panels with high profitability rise, domestic display companies such as Samsung Display and LG Display are expected to see improved earnings.

According to market research firms WitsView and Hana Financial Investment on the 10th, the price of 65-inch LCD panels recorded $177 in January, up 0.6% from the previous month. During the same period, the price of 55-inch LCD panels also rose about 0.9% to $112.

The rise in 65-inch LCD panel prices is the first in 33 months since April 2017. For 55-inch panels, it is the first increase in 17 months since August 2018.

The large 65-inch and 55-inch LCD panels are core products, accounting for 50% of total LCD panel sales revenue. Prices of less profitable 32-inch and 43-inch LCD panels remained the same as last month.

LCD panel prices had been on a long-term decline due to the influx of low-priced Chinese products and overheated market competition.

Fluctuations in LCD panel prices are directly linked to the profitability of domestic display companies. Samsung Display and LG Display experienced performance slumps last year, with operating profits decreasing. LG Display is estimated to have recorded an operating loss exceeding 1 trillion won last year. Samsung Electronics’ display division also saw a significant drop in operating profit in the fourth quarter of last year.

Due to poor profitability, Samsung Display and LG Display have reduced supply by shifting and converting LCD production lines, leading to a turnaround in LCD panel prices.

Samsung Display announced last year plans to convert some of its LCD production lines to Quantum Dot (QD) displays. The company is cutting production at its 8.5-generation line at the Asan plant in Chungnam, which produces LCD panels, and plans to invest 13.1 trillion won by 2025 to produce QD displays.

LG Display has also reduced LCD panel production. The company plans to completely cease domestic TV LCD panel production within this year.

On the 6th, at a press conference held in Las Vegas, USA, during CES 2020, LG Display President Ho-young Jung said, "Domestic LCD TV panel production will mostly be wrapped up by the end of this year," adding, "We will focus on Chinese LCD TV panel factories."

Chinese companies such as BOE are also reportedly reducing LCD panel production and postponing the mass production timing of new factories to control output.

With LCD panel prices turning upward and related companies increasing production of highly profitable products such as QD displays and organic light-emitting diode (OLED) panels, earnings are expected to improve this year. There is also a prediction that the rise in LCD panel prices will drive up prices of high-profit products like QD displays and OLED panels.

Global market research firm IHS Markit recently forecasted in a report that major LCD panel prices will start rising from the first quarter of this year. The rapid depletion of TV panel inventory due to the strong U.S. economy is also seen as a positive factor.

Hana Financial Investment researcher Hyunsoo Kim analyzed, "As Korean companies have reduced production, LCD panel prices have turned strong for the first time in a while. Since the price increase is expected to continue for some time and production of high-profit panels will also persist, earnings this year are expected to improve compared to last year."