2018 review and 2019 outlook: Challenges and opportunities for flat panel industry

Display Exhibition:To provide with you the latest industry news】

The global flat panel industry got off to a bumpy start in 2018 amid growing concerns of oversupply resulting from continued capacity ramps by Chinese firms. In fact, the year ended up with the highest capacity growth since 2013, due largely to BOE Technology's 10.5G fab coming online and CEC Group's explosive capacity expansion.
On the demand side, a number of factors did help rack up panel demand, including the FIFA World Cup 2018, a pick-up of gaming panels and the growing popularity of large-size TVs.
Quarter-by-quarter, demand and prices for large-size panels weakened in the first quarter of 2018 amid an off-peak season correction, with panel prices continuing falling in the second quarter despite a rebound in demand.
Prices of TV panels staged an upswing starting the third quarter propelled by peak-seasonal effects and shipments of gaming panels and bezel-less panels also gained momentum in the quarter.
But the upswing was proved to be short-lived as prices were plunging again in the fourth quarter amid inventory adjustments at clients and the availability of new capacities from China.
Overall profitability for the entire industry was lower in 2018 as compared to a year earlier but was not really too bad. AU Optronics (AUO) had been operating with profits for nine consecutive quarters as of third-quarter 2018 and Innolux also was profitable in most of 2018 with the exception of the second quarter, in which the company posted losses due to the appropriation of retained earnings.
Looking into 2019, the tension between the US and China will bring more uncertainty to the market, affecting the global economy and weakening consumer demand in the end market, which is likely to work to slash panel demand.
Adding the pressure to the negative impacts of the US-China trade dispute is the continued capacity ramps by China's flat panel makers.
The production capacity of BOE Technology's 10.5G line is expected to reach 90,000 substrates a month by the end of 2018 and to climb to full capacity of 120,000 units by March-April 2019.
And more capacities will become available in 2019, including an 11G line of China Star Optoelectronics Technology (CSOT) in the first quarter, a 8.5G OLED line of LG Display in May, newly added capacity from a 8.6G line of HKC in June, and a 10.5G line of Sakai Display Products (SDP) in September.
In response to rising panel supply and a growing saturation in the global TV market, flat panel maker are keen to enhance their deployments in the large-size TV panel sector.
Global shipments of TVs in 65-inch and above sizes are expected to grow to 21.9 million units in 2019 from 16.8 million units a year earlier; and shipments of 50-inch TVs will grow to 19 million units from 15.5 million units, according to Sigmaintell Consulting.
The shift to focusing on large-size TVs will help push up panel shipments in 50-, 55-, 58-, 60-, 70- and 75-inch sizes, particularly with China players to ramp up shipments of 50- and 58-inch panels, and also begin shipping 70-inch models.
In 2019, the deployment of new TVs will go in two directions: LCD TV vendors, including Samsung, Sony, TCL, Hisence, will eagerly promote 8K devices; and LG Electronics, Sony, Toshiba and Skyworth will roll out efforts to foster the development of the OLED TVs. Hisene, in particular, will begin to market its own-brand OLED TVs in Europe and Japan in addition to its home market of China.
Nevertheless, the penetration of 8K TVs is likely to reach a mere 0.1% in 2019, constrained by yield rates, supply capacity and high production cost. And global OLED TV shipments are to top 3.5 million units in the year for a 1.4% penetration rate.
Competition between OLED and LCD technologies in the small- to medium-size panel sector will become keen amid market reports indicating that Apple tends to use AMOLED panels for all of its new models launched in 2019 and beyond, taking the lesson from the mishap of the iPhone XR which uses LCD panels. If it turns out to be so, shipments of OLED panels will boom at the expense of LCD.
Foldable, 5G smartphones
The planned launch of foldable smartphones in 2019 will give a boost to shipments of flexible OLED panels by Samsung Display thanks to its leadership in the sector in terms of capacity and technology. But overall shipments of flexible OLED panels for foldable smartphone applications will not take off until the second half of 2019 or even 2020.
Small- to medium-size panel makers will also eye orders from the 5G sector, as brands including Samsung, Huawei, Xiaomi, Oppo, Vivo and OnePlus will likely roll out 5G-enabled smartphones in 2019. Again, initial panel shipments for 5G smartphone applications will be also limited as global shipments of 5G smartphones are estimated to reach about five million units in 2019.
While OLED technology is gaining momentum in the smartphone and TV sectors, Taiwan's panel makers, notably AUO and Innolux, are foraying into the development and production of mini LED-backlit LCD panels for applications including public information displays (PIDs), digital signage, interactive screens, and transportation information boards.
AUO already began marketing its mini LED-backlit panels for gaming monitors in the fourth quarter of 2018 and will also tap the lucrative markets for gaming notebooks, handsets and VR devices.
Innolux will begin shipping its mini LED PID products at the end of January 2019 and large-size mini LED TV panels in the second quarter. The company has an array of mini LED products under review and considers automotive applications to be having the highest growth potential with plans to launch related products in 2020.



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