Just as many industry people are scratching around trying to find what they need to deliver on work in the midst of technology shortages, there’s word the display part of the business is flipping from shortage to oversupply.
The industry analysts at Display Supply Chain (or DSCC) have pushed out a new report that suggests “the shortage of large LCDs, which has lasted for almost a year and has resulted in the biggest panel price increases in the history of the industry, has begun to turn into an oversupply.”
The demand drivers that led to the shortage, particularly strong TV demand in the USA, are fading away with the spread of vaccination in the United States, and industry supply is filling the pipeline with enough inventory to eliminate any fear of shortage.
DSCC suggests the big spike in sales for TVs through the past 16 months, and resulting supply constraints, has eased as the US and Canada have got a lot of the population jabbed and binge-watching is not as prevalent or necessary.
While demand for in-home entertainment soared during the pandemic, US consumers are starting to spend more on travel and other areas that were restricted during lockdown, and therefore will spend less on TVs. We estimate that US TV shipments in the second quarter of 2021 are likely to be about the same as 2019 and down 24% Y/Y from 2020.
DSCC: TV Shipments in North America by Quarter, 2018-2021
In a presentation at the SID/DSCC Business Conference during Display Week 2021, Stephen Baker of NPD showed that TV sales in the US in April declined by 24% Y/Y. A part of this was an unusually strong April in 2020 because of US government stimulus payments, but our sources have indicated that TV sales in the US have continued to decline by double digits % Y/Y through the month of May, and we have every reason to believe that this pattern will continue.
Overall, we see several examples related to the reversal of supply and demand for large LCDs in the last few weeks:
- Strong TV demand has been slowing especially in the US.
- Slowdown of various consumption in India etc. due to rapid spread of coronavirus infection.
- Samsung VD is said to have had a downward revision of its 2021 sales plan for TVs by more than 10%.
- Chinese LCD makers have begun to ask TV brands to buy more panels.
- The rate of increase in LCD TV panel prices began to ease in May.
With this combination of factors, DSCC has concluded that the reversal of supply and demand for large LCDs has begun.
With respect to the outlook for LCD panel prices in the second half of 2021, we see a possibility that the panel price for LCD TVs will fall in some sizes starting in July. Since the profit margins of LCD manufacturers are at a very high level, we expect that panel makers will maintain a high utilization rate without adjusting production even if there is an oversupply.
TVs and commercial displays look much the same, but differ in engineering and I am not sure if oversupply in TVs means, with time, plenty of supply on the commercial panel side. Even if display panel availability is improving, there are lots of other electronics elements in a digital signage build – media players, connectivity, audio and so on – that might also be hard to find.