From 2016 to 2018, affected by the rapid release of domestic production capacity of high generation line, the overall supply of LIQUID crystal panel exceeds demand, and the price of panel industry has significantly decreased. For example, the 32-inch panel dropped from $70 / piece in August 2017 to around $42 / piece by the end of 2018. The price dropped by 40% and panel manufacturers' profitability further declined. As manufacturers adjust product structure, panel manufacturers led by South Korea began to layout OLED production line, and gradually closed or converted LCD production line, panel price decline moderated, since 2019, 32 inch, 43 inch, 55 inch mainstream LCD TV panel prices gradually stabilized.

Supply and demand of LIQUID crystal panels (by area)

Data source: Public data collation

Related report: Market Competition status and Investment Risk Assessment Report of China's LCD Panel Industry 2020-2026 released by Zhiyan Consulting

Television is still the main application area for panels. Three factors will still increase the TV panel demand space. Digital - analog conversion and signal upgrading, large - scale, ultra - HD TV fast popularity. Automotive displays, Pids, smartwatches and OLED TVS are seeing more demand growth. Each terminal application still continues the trend of large size. The launch of the "smart screen" has boosted demand.

Large size panels of 65 "and above are shipped worldwide

Data source: Public data collation

China's share rose to 53 per cent. With the continuous investment in large-size panel production capacity in the Chinese mainland, the Chinese mainland (including the investment of overseas panel factories in the mainland) became the region with the largest production capacity of high generation line in the world for the first time in 2017, accounting for about 40%. In 2019, the proportion has increased to 53%, and is expected to reach 68% in 2024.

As the most important consumer market in the world, in addition to the basic support of Domestic demand in China, TV brand manufacturers have gradually grown up and fostered many excellent mainland TV brand manufacturers such as Hisense, TCL, Skyworth and Xiaomi, and also found new outlets for mainland panel manufacturers to ship products. On the other hand, after years of technical precipitation in the production process and flow of liquid crystal panel, domestic manufacturers are becoming mature from learning. However, the investment of panel production line is still heavy capital investment. The investment of an 8.5 generation line LCD panel production line is about 30 billion RMB. Due to the pressure of capital or the consideration of profit maximization, overseas manufacturers are not strong enough to invest.

Panel production capacity distribution (according to production line specifications)

Data source: Public data collation

Manufacturers in mainland China will continue to expand production in the next two years. The next two years, the Chinese mainland panel makers will still have more than 6 8.5 generation LCD production line put into production, the new capacity reduced shipping area of about 060 million square meters, 24.34% CAGR in, planning and production of OLED panel production line 5, respectively, four line 1 and 8.5 generation of line 6 generations, new capacity reduced shipping area of about 9.05 million square meters, CAGR of 58.52%.Mainland panel factory high generation investment delay, after 2021 panel capacity area supply is expected to decrease. The area of global panel production capacity is expected to peak around 2021.Since then, as the investment of mainland panel manufacturers slows down and panel manufacturers begin to liquidate old production capacity, the area of global panel production capacity may gradually begin to decline.

Average Global TV Shipment Size (in inches)

Data source: Public data collation

Large size panels of 65 "and above are shipped worldwide

Data source: Public data collation

The LCD panel production line planned to be put into production in mainland China in the next 2 years

Data source: Public data collation

Due to the supply and demand imbalance caused by the continuous production of large panel factories, panel prices have experienced a round of sharp decline and are now close to the cost range of panel factories. Demand deceleration, the panel factory reduced the grain rate. China Film Tube filed for bankruptcy, the industry is clear signs of bottoming. Profits hit bottom, the panel factory passive capacity adjustment.

The panel industry will reach the equilibrium state of supply and demand faster after restructuring. According to Korean manufacturers' current restructuring trend, the LCD panel industry GLUT will fall below 15% after Q4 in 2019, and will basically balance supply and demand in most quarters after Q3 in 2020.That is nearly two years before a significant improvement in supply and demand could be seen in Q3 2022.If this round of restructuring continues, some quarters after Q3 2020 are expected to be tight.

2019 LCD panel mainstream size price change trend

Data source: Public data collation

LCD Production Capacity forecast for South Korea (Sub-size)

Data source: Public data collation

2019-2022 supply and demand forecast

Data source: Public data collation

After Chinese manufacturers joined the competition, the supply of large-size panels increased, the demand maintained stable, and the overall profit level of manufacturers was limited, indicating that the industry had bottomed out. Companies with leading technology and strong cost control are more likely to survive at the bottom of the industry. After the end of capacity expansion, with the exit of old production capacity and the emergence of new demand such as smart screen and OLED TV, the price is expected to enter the recovery channel and a new cycle is about to start.

As the component of the panel, the glass substrate determines the size of the panel on the production line. According to the calculation of panel capacity based on the glass substrate, the theoretical supply area of the LCD panel is expected to reach 264,227 square meters in 2019, with a year-on-year growth rate of 11%.

Liquid crystal panel supply (calculated by area of glass substrate)