#London #United Kingdom #Omdia #LCD TV #Fab utilization

Increased Fab Utilization Among Display Panel Manufacturers

The latest research by Omdia reveals a significant rise in the fabrication (fab) utilization plans of display panel makers, marking three consecutive months of growth leading into the first quarter of 2025. By the end of November 2024, the quarterly usage rate stood at 77%. By December, it further increased to 79%, and projections for January 2025 indicate a robust 80% utilization.

Alex Kang, Principal Analyst at Omdia, points to heightened demand for specialized television panels as the driving force behind this upward trend. The recent 'Swap Old for New' subsidy initiative introduced by the Chinese government has catalyzed a boost in market demand, compelling major TV manufacturers in China to secure additional panel supplies to capitalize on this opportunity. This shift is evident as China’s leading brands strategize to enhance their market footprint.

The demand surge has been further amplified by anticipated tariffs under the newly elected U.S. administration. In response, several Chinese TV manufacturers have ramped up inventory levels, particularly in Mexico, aiming to streamline shipments across the U.S. border. This strategy reflects a proactive approach to mitigate potential supply chain disruptions. However, this heightened activity has introduced risks associated with component shortages, notably impacting critical items like driver ICs and polarizers essential for the manufacturing of IT LCDs.

As major Chinese panel producers such as BOE, China Star, and HKC Display dominate the LCD TV panel market, they are particularly affected by the Chinese government’s incentives. Initially, these companies were contemplating halting operations for the two-week Lunar New Year holiday at the end of January 2025 to maintain pricing strength. However, in light of the escalating demand, multiple manufacturers have opted to cancel their holiday plans altogether, choosing instead to sustain high production levels.

Despite this current boon in demand and elevated utilization rates, manufacturers are adopting a cautious stance regarding long-term market trends. The possibility remains that once the spike in demand subsides, companies may revert to a more conventional production-to-order structure and scale back manufacturing accordingly. Kang’s insights underline the delicate balance that panel makers must maintain in response to the volatile nature of market demand, emphasizing a need for agility in production strategies.

Overall, Omdia’s recent findings underscore a notable shift in the landscape of display panel manufacturing, fueled by policy changes and shifting market demands. As the industry navigates these complexities, the impacts on supply chains and manufacturing strategies will be critical to monitor in the coming months.

About Omdia

Omdia is a research and advisory group under Informa TechTarget, Inc. (Nasdaq: TTGT), focused on providing insights into various technology sectors. With extensive market understanding and actionable intelligence, Omdia empowers clients to make informed strategic decisions.