AU Optronics Corp (AUO, 友達光電) and LG Display Co (LGD) might consider investing in low-cost G10.5 fabs to produce 65-inch and 75-inch LCD TV panels to capitalize on the increasing demand for big-screen TVs, IHS Markit said.
That would also elevate the competition in the global LCD panel industry to a new level, as only Chinese flat-panel makers are spending lavish funds on building G10.5 fabs, the market researcher said on Thursday.
FOUR NEW PLANTS
Four G10.5 plants are expected to enter operation in 2019 or 2020 in China, including those owned by BOE Technology Group (京東方) and China Star Optoelectronics Technology Co (華星光電), IHS Markit analyst David Hsieh (謝勤益) told reporters on the sidelines of an annual display forum in Taipei.
By the end of 2019, China is expected to control 45 percent of the world’s flat-panel market, while Taiwan and South Korea will have a 23 percent and 26 percent share respectively, the research house said.
“Chinese companies are targeting jumbo-size 65-inch and 75-inch TV panels,” Hsieh said. “However, the investment and consumption of resources are enormous, while technological barriers are high.”
A G10.5 production line would cost US$5.8 billion and would require 445 hectares of land, Hsieh said.
In comparison, a low-cost G10.5 production line would cost only about US$3 billion, or half of the amount required for a G10.5 line, he said.
For cost-sensitive companies like AUO, it will be an optimal choice, Hsieh said.
“AUO and LGD are considering building low-cost G10.5 lines to expand capacity, as demand for 65-inch panels is high,” he said.
AUO, Innolux Corp (群創), LG Display and Samsung Electronics Co are the world’s major suppliers of 65-inch TV panels, according to IHS Markit.
Hsieh said TV panel prices are to slide next quarter, snapping the longest streak of price increases in the industry’s history.
TV set makers have stockpiled large inventories due to concerns of supply constraints, he said.
TIGHT SUPPLY
Prices for most TV panels this month are generally flat from last month, according to IHS Markit.
Prices for 50-inch and 65-inch TV panels rose only between US$2 and US$5 per unit due to tight supply, it said.
However, Hsieh said he does not expect panel prices to collapse any time soon, as demand will outstrip supply by 5 percent.
“Supply will continue to be tight this year,” he said.
IHS Markit said it expects panel prices to remain stable this quarter, and the price trend in the second half of the year would depend on inventory digestion and shipments, as new capacity additions are not expected to be significant.
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