The prices of flat panels used in entry-level smartphones have surged 50 percent this month to an all-time high as handset vendors refocus on shipping more low-end models to offset disappointing sales of premium smartphones, market researcher TrendForce Corp (集邦科技) said in a report released yesterday.
The price hikes were greater than a monthly increase of 30 percent for advanced high-definition 5-inch and 5.5-inch smartphone panels this month, TrendForce said.
“Entry-level smartphones are making a comeback and have become a shipment driver for smartphone vendors, which are facing challenges, including offering innovative features in new premium smartphones to stimulate sales,” the Taipei-based research firm said.
One smartphone brand in particular is suffering from a setback due to serious manufacturing defects, the research firm said, apparently referring to Samsung Electronics Co’s recall of its latest flagship Galaxy Note 7 smartphone after reports of fires caused by batteries.
The research firm attributed the scant supply of low-resolution panels for the drastic price hikes.
As the supply situation is to remain little changed, TrendForce expects rising demand and limited supply of 4-inch and 4.5-inch WVGA displays to help keep prices high next quarter.
HannStar Display Corp (瀚宇彩晶) and China’s Century Technology (Shenzhen) Co Ltd (深超光電) and InfoVision Optoelectronics (Kunshan) Co Ltd (龍騰光電) are to benefit from the trend, as the three companies are the world’s largest suppliers of low-resolution smartphone panels, TrendForce said.
As those panels deliver low gross margins, most panel makers have exited the market, the research firm added.
HannStar last month saw shipments of small and medium-sized panels rise about 47 percent to 39.89 million units, compared with 27.22 million units in July, the company said in a statement.
That helped raise the company’s revenue by about 25 percent from July’s NT$1.82 billion (US$57.43 million) to last month’s NT$2.27 billion, the statement said.
Increasing demand from Chinese no-brand smartphone vendors has also aggravated supply constraints, TrendForce said.
Chinese no-brand handset vendors have turned to less advanced panels, because they cannot source enough high-definition panels to meet their needs, the research firm said.
However, TrendForce expects a downside risk for the high-definition smartphone panel segment in the first quarter of next year, as supply will increase substantially after China’s BOE Technology Group (京東方) and China Electronics Panda Crystal Technology Corp (中電熊貓) ramp up production of new 8.5G fabs next year.
An 8.5G production line can produce at least twice as many 5-inch flat panels as a 6G production line, TrendForce said, adding that most panel makers produce 5-inch panels at 6G plants.
Prices for high-definition smartphone panels are expected to decline next quarter, the research firm said.
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