Display makers are dramatically cutting back on their investments in production equipment as demand for new panels dries up in the wake of a slowing economy.
That’s according to the latest Quarterly Display Capex and Equipment market share report by Display Supply Chain Consultants, which found that display panel makers will cut back on their capital expenditures this year, spending a total of just $3.8 billion on new equipment.
During the COVID-19 pandemic, the display market experienced a surge in demand for panels of every shape and size as consumers and workers alike sought to upgrade their electronics. With millions of people globally facing extended lockdowns, many decided to invest in new computers and TVs to get work done remotely and keep themselves entertained. However, now that most people have relatively new devices, and with the economy going down the pan, demand for flat panel displays has cratered.
Display makers went all out in 2020 and 2021, ramping up their production capacity to meet the growing demand for products. But according to DSCC’s latest report, that has resulted in unusually low fab utilisation now. With too much excess capacity on their hands, many display makers started posting losses in the second half of 2022.
DSCC’s report now projects display equipment spending will fall 68% this year compared to the $12 billion spent during 2022. Spending on OLED production equipment will fall by 11%, while LCD spending will decline 24% as panel makers delay adding new capacity, DSCC said.
On the other hand, DSCC said it expects to see a tentative recovery in 2024, forecasting capex to rise to $7.6 billion that year. Spending on OLED manufacturing equipment will rise 102% to $4.3 billion as demand for the superior display technology increases. Meanwhile, LCD spending is forecast to rise by 111% to $3.2 billion. DSCC noted that most OLED investments will address the IT market, where LCD technology is rapidly being phased out.
Beyond 2024, OLED spending will grow by another 28% in 2025. However, spending on LCD is expected to decline that year as the technology loses market share. As such, DSCC says a full recovery of demand for flat panel displays isn’t likely to happen until 2026 at the earliest.
The report notes that Samsung Display has already begun construction of its new A6 fab, which is being built to ramp up production of QD-OLED displays.
