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Commodity LCD displays, led by 32-inch high definition (HD) displays, have in the past been a key industry revenue generator, but that situation is changing, according to IHS Inc.,the leading global source of critical information and insight. Industry profits for 32-inch panels increased by 24 percent, year over year, in the first quarter (Q1) of 2015, but they are expected to decrease by 22 percent in Q1 2016.
“Most LCD TV panel prices began to fall after the first quarter of this year, and prices will reach their lowest level in the second quarter of 2016,” said Yoshio Tamura, senior director of research and analysis for IHS Technology. “Since equipment depreciation cost is factored into 8th-generation fabs, the total LCD profit margin is expected to turn negative next year.”
According to the IHS Large Area Display Cost Model Report, LCD panel makers are increasing their capacity in China, with 8th-generation fabs that mainly produce displays of 32 inches, 48 inches, 49 inches and 55 inches. As profit margins fall for 32-inch LCDs, manufacturers are expected to shift their 32-inch LCD production to larger sizes, thus reducing prices and increasing demand for displays larger than 48 inches.
IHS is the leading source of insight, analytics and expertise in critical areas that shape today’s business landscape. Businesses and governments in more than 150 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs about 8,800 people in 32 countries around the world.