DSCC Research Shows Asian Panel-Makers Had Tough Couple Of Quarters
September 23, 2019 by Dave Haynes
Research firm DSCC’s Quarterly Display Supply Chain Financial Health Report suggests the major display panel makers in China, Korea and Taiwan are in the midst of a rough patch, with nine of the 13 panel makers tracked having year to year revenue declines.
The industry tracking also suggests many of the companies recorded losses in the last couple of quarters.
Panel maker revenues eked out a 1% increase in revenues Q/Q, and a 4% increase Y/Y to $24.7 billion, on the strength of Samsung’s increase. Samsung’s revenue increased 20% Q/Q and 24% Y/Y, but it was boosted by a large payment from Apple for underperformance of iPhone panel orders. We estimate the payment at $771 million; if you remove that figure, then panel maker revenues were down 2% Q/Q and flat Y/Y.
Nine of the 13 panel makers (including CPT) had Y/Y revenue declines; the exceptions were Samsung and three of the Chinese panel makers – BOE, CSOT, and Visionox – all of whom have taken on substantial capacity increases in the last year. Samsung holds the top revenue share with 26%, and opened up the gap with 2nd place LGD at 19%, while BOE edged closer to 2nd place with 17%. The battle for 2nd place is likely to be close in the coming quarters as BOE records new revenues from its Gen 10.5 LCD plant and flexible OLED lines, while LGD starts getting revenues from its OLED TV expansion in Guangzhou.
Turning to operating profit, we can clearly see the winners and losers in the current display landscape. With many of the panel makers losing money, the industry in total recorded only a net of $272 million in operating profit in Q2. Without the large payment from Apple, Samsung would have lost money, and the industry total would have been a loss of almost $500 million. Including the Apple payment, Samsung’s operating profit represented 236% of industry profits in the quarter, while BOE’s profit of $221 million gave it 81% of industry profits. As we reported last week, government subsidies account for almost the entire amount of BOE’s profit.
Comparing Q2 results with Q1 was a mixed bag, with six companies improving their operating profits and the other six getting worse. The three Taiwanese panel makers all improved their results; although AUO and Innolux both continued to record losses in Q2, the losses narrowed from Q1. Hannstar managed to squeeze out a tiny ($4 million) profit.
The full report is fee-based and probably way more detail than you need unless you specifically work in flat panel manufacturing. The free to read summary is here …