Chinese Makers’ M/S to Continue Rising
The author is an analyst of NH Investment & Securities. He can be reached at j.ko@nhqv.com. -- Ed.
In 2021, LCD panel prices are expected to climb in 1Q, remain flat in 2Q, and decline from 3Q. Backed by ongoing facility expansions, Chinese LCD panel makers should see a continuing rise in M/S. In addition, a recent blackout at the Japanese factory of NEG, a glass substrate maker, should also benefit Chinese firms.
LCD panel prices to rise in 1Q21, remain flat in 2Q21, and decline from 3Q21
LCD panel prices are expected to rise in 1Q21, remain flat in 2Q21, and decline from 3Q21.
LCD panel prices, which ended high in 2020, are expected to continue rising in 1Q21 on an anticipated decrease in glass substrate supply. On Dec 10, a power outage occurred at NEG’s Takatsuki plant in Japan. With normalization at the Takatsuki plant expected in 1Q21, domestic and Taiwanese panel makers’ sourcing of glass substrate is unlikely to proceed smoothly in the near future. In 2Q21, an acceleration in panel production alongside normalized supply of glass substrate should prevent LCD panel price growth. The rate of glass substrate supply excess is forecast to widen from 0.5% in 1Q21 to 3.6% in 2Q21.
LCD panel prices are forecast to decline from 3Q21, as supply should exceed demand. We expect supply excess for LCD panels to reach 3.2% in 3Q21 and 3.4% in 4Q21 on the back of ongoing production expansion at Chinese manufacturers.
Chinese LCD panel makers’ M/S to continue rising
Chinese LCD panel makers are to continue expanding their production capacity, centering on 8G-and-above facilities, in a bid to increase M/S. Given Korea’s withdrawal from the LCD arena, we expect the global number of LCD production facilities (8G or higher) to fall from 32 in 2020 to 31 in 2021 to 30 in 2022. On the other hand, with Chinese panel makers ramping up investment, the portion of Chinese manufacturers is to increase from 63% in 2020 to 68% in 2021 to 78% in 2022, with China coming to claim a market-leading position.
Of note, Chinese panel makers are highly likely to see M/S expansion in 1Q21, as they are insulated from the effects of NEG’s Takatsuki power outage. Chinese companies’ glass substrate supply chain has diversified to encompass Corning, AGC, and NEG (China, Xiamen plant).