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Chinese Display Makers Scaling back LCD Output
A Respite for Korean Firms
Chinese Display Makers Scaling back LCD Output
  • By Jung Min-hee
  • December 5, 2019, 10:40
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Chinese display companies have begun to reduce their liquid crystal display (LCD) output.

Korean display producers are expected to take a breather as Chinese companies have begun to reduce their liquid crystal display (LCD) output to halt the relentless fall in LCD panel prices. However, they need to stay alert as Chinese companies are rapidly catching up with Samsung Electronics and LG Electronics in organic light emitting diodes (OLED) technology.

Chinese firms, which have secured dominance in the global LCD market, began to shift their focus away from LCDs in the second half of this year. BOE, the world's No. 1 LCD company in terms of shipment, has reduced output from its 10.5-generation lines by 25 percent. CSOT and HKC also reduced production of 8.5-generation LCD panels by 10 percent and 20 percent, respectively, this year.

Consequently, market watchers expect the prices of large LCD panels to rise from early next year. LCD prices currently remain below the cost of production. An 55-inch panel was traded at US$151 last November but plunged to US$98 this October. Fixed prices for 65-inch and 75-inch LCD panels also dropped for the 14th consecutive month as of the end of last month, according to market research firm IHS.

If LCD supply stabilizes, panel prices will improve from the beginning of next year. Soh Hyun-chul, a researcher at Shinhan Investment Corp., said in a report released on Dec. 2. “The price of an open cell 32-inch LCD TV will rise 29 percent from US$31 in December 2019 to US$40 in September next year." He added, “LCD TV panel prices are expected to rebound starting next month and the uptrend will continue until September." In particular, LG Display, which is expected to see its operating loss exceed 1 trillion won this year, is likely to see its profitability improve as 80 percent of its sales come from LCDs.

Nonetheless, as Chinese companies are shifting their focus to small- and large-sized OLEDs, Korean display companies need to be prepared for a narrowing technology gap. BOE has recently started to build a 6.5-generation OLED manufacturing plant by investing about 7.9 trillion won while HKC is building a 8.6-generation large-sized OLED production line that will cost 5.4 trillion won.