Questions? Call us: +1 760-918-6722

Temporary Color TFT Panel Supply Shortage

Published on November 30, 2016

One of our responsibilities as a supplier of color TFT LCD displays is to keep our customers up to date not only on what is happening at Displaytech, but in the larger display market in general. Recently, several market forces have combined to have a significant impact on the global supply chain for small and medium size color TFT panels, as well as premium panels using wide viewing angle IPS technology.

Contact us today to discuss your purchasing strategy during these uncertain times. We strongly recommend ordering 6-12 months worth of color TFT display modules immediately. Your SEACOMP Account Manager will work with you to develop a delivery plan for 2017.

Read more below about the current market conditions.

What is causing the TFT display panel supply shortage?
Factors that are contributing to the TFT display shortage and resulting cost increases include a change in product strategy from major Korean TFT LCD suppliers and an overall temporary reduction in production capacity for small to mid size LCD panels.

Changes in Product Strategy from Major Korean Panel Suppliers
Due to increasing TFT LCD panel production capacity and competition from lower cost Chinese suppliers, large Korean panel suppliers such as Samsung and LG are rapidly moving away from LCD panel production. The trend towards increased production capacity in China will ultimately erode the profitability of the Korean TFT display panel business, especially for small and mid size displays.

Decrease in Production Capacity for Small to Mid Size TFT LCDs
Due to the product strategy shift by Samsung and LG, Chinese and Taiwanese panel suppliers are rushing to fill the temporary gap in supply created by the reduction in Korean TFT LCD panel production. Chinese and Taiwanese panel suppliers such as BOE, AUO, CPT and Innolux have seen production volume for display panels increase dramatically which, in turn, has led to a relative decrease in production capacity for lower cost small and mid size panels. This is a temporary situation as Chinese and Taiwanese panel manufacturers ramp up to meet demand.

What is the Impact of the Display Panel Shortage on Price and Lead Time?
Short term price volatility and extended lead times have become the new normal. Although prices for small and medium size color LCD panels have risen for three consecutive quarters in 2016, the situation has recently become more severe. We have seen monthly price increases on display panels and are no longer able to absorb the steady LCD panel cost increases as we have up to this point. As a result of the panel price volatility in the market, Displaytech quotes are now valid for only 30 days.

Additionally, TFT LCD panel lead times have been very inconsistent. Due to the overall production capacity shortage, panel manufacturers are setting up and making smaller size TFT display panels with much less frequency. Under these current market conditions, we cannot accurately predict lead times and have to act quickly when certain display panels become available. Customers may also be asked to act quickly when placing orders to secure panels in a timely fashion.

Displaytech will reduce pricing and stabilize lead times accordingly once the global LCD panel supply situation has recovered to its normal state.

How Long Will the TFT Panel Shortage Last?
Although we are not able to guarantee an end date, most estimates say that supply will catch up with demand for small to medium size TFT LCD panels within the first half of 2017. We will continue to monitor the situation and provide updates on our website.

Please contact us today to learn how this situation may impact your business in 2017.

Additional reading on this topic:
China's BOE benefits from Korean makers producing fewer IT panels
Digitimes Research: Global small- to mid-size LCD panel shipments to slip at CAGR -4.6% in 2017-2021
Strong Demand to Push Up Prices of LCD Panels for Smartphones