Production Costs of Large-Size Panels Down in 3Q18

Estimated reading time: 2 minutes

According to the large size panel cost breakdown, the latest report by WitsView, a division of TrendForce, the overall production costs of large-size panels are estimated to drop by 1−1.5% QoQ in 3Q18, less than 2−2.5% in 2Q. This is because the components of panels have a relatively limited price drop influenced by the tight supply. Moreover, the panel makers still face the amortization of equipment capital expenditure for new technologies including narrow-bezel, mini LED and inkjet printing OLED.

Components Like Driver ICs and Polarizers are in Tight Supply During the Peak Season

“As the new capacity of Chinese panel makers increases the demand for glass substrates, the glass manufacturers do not have enough capacity of cutting glass sheets for Gen 6 or more advanced fabs,” says Julian Lee, the assistant research manager of WitsView. The polarizers see a tight supply in 3Q18, as Nitto’s fab in Japan experienced discontinued production and transportation for several days due to the continual rain in July. Meanwhile, other polarizer manufacturers have been unable to increase the supply, since their production lines have already been operated with a full availability during the peak season. However, the tight supply of glass substrates and polarizers is expected to be eased in the fourth quarter.

The supply of driver ICs has also been insufficient in 1H18 due to the foundries’ adjustment in wafer starts. The undersupply has become more severe in the traditional peak season, and is expected to continue to the fourth quarter. Meanwhile, the capacity for testing and packaging, as well as film (COF) also faces an undersupply, as TDDI solutions for smartphones see higher demand and the production of new iPhones is scheduled in the short term.

In addition, it is difficult for panel makers to bargain with backlight module suppliers, because the prices of backlight module components, such as optical coatings and LEDs, have reached almost the lowest level.

Rebounding Panel Prices May Improve the Profitability of Panel Makers

The TV panel prices have already rebounded since July, although the cost reduction of panels is lower than expected. IT panel prices have shown a flat trend or even a slight increase, which may improve the profitability of panel makers. For example, the cash cost of 32-inch TV panel is about $43-44/piece, but the quote for it has rebounded higher than that in the third quarter. Similarly, the cash cost of 65-inch panel is about $210-220/piece, of which the quote is at least $230-240/piece in the third quarter. Overall, the profitability of most panel makers in 3Q18 is expected to be better than in 2Q.

About TrendForce   

TrendForce is a global provider of the latest development, insight, and analysis of the technology industry. Having served businesses for over a decade, the company has built up a strong membership base of 435,000 subscribers. TrendForce has established a reputation as an organization that offers insightful and accurate analysis of the technology industry through five major research divisions: DRAMeXchange, WitsView, LEDinside, EnergyTrend and Topology. Founded in Taipei, Taiwan in 2000, TrendForce has extended its presence in China since 2004 with offices in Shenzhen and Beijing.