LCD panel maker AU Optronics Corp (AUO, 友達) is poised to benefit from the imminent shutdown of a Samsung Display Co G8.5 fab, as the South Korean firm shifts away from LCD panel manufacturing, market researcher IHS Markit said on Thursday.
Beginning this month, Samsung Display plans to retire a G8.5 fab, L8, in two phases and convert it to make high-resolution 8K TV displays that use its Quantum Dot-OLED technology, the market researcher said, adding that this would reduce supply of LCD substrates by 125,000 units a month.
“South Korean and Taiwanese LCD panel makers are facing mounting pressure to transform quicker amid the rise of China,” David Hsieh (謝勤益), a senior display industry analyst with IHS Markit, told an annual display forum in Taipei.
To fend off competition from China, Taiwanese and South Korean companies are being forced to retire or covert older-generation fabs to make niche products as those fabs cannot match China’s new G10.5 fabs, Hsieh said.
“Samsung has taken the lead in retiring one of its four G8.5 fabs,” he added.
Samsung’s L8 fab primarily produces 55-inch and 45-inch TV panels, the research firm said.
China’s BOE Technology Group Co (京東方) launched the world’s first G10.5 fab in the second half of last year to produce 65-inch and 75-inch TV panels, which Samsung Display and AUO produce at G8 fabs, IHS Markit said.
Chinese panel maker China Star Optoelectronics Technology Co (華星光電) is struggling to overcome a low yield rate at its first G10.5 fab, and aims to ram up production at the fab this year, IHS Markit said.
“AUO and BOE are to benefit ... by supplying 55-inch TV panels to Samsung Display customers,” Hsieh said.
Samsung Display’s plan to close its L8 factory has raised concerns about potential supply constraints among TV makers and therefore stimulated unusual demand for smaller TV panels such as 32-inch panels, he said.
“TV assemblers have since the end of March been placing more orders to build up their inventory in preparation for the peak season in the second half of the year,” Hsieh said.
The demand has boosted TV panel prices, which could provide some relief to panelmakers, he said.
“However, we believe this will be a short-term rebound. After July, there will be an oversupply of panels which will challenge panel makers in the second half,” Hsieh said.
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