It is predicted that the capacity utilization rate of global display panel manufacturers will drop to 73% in the third quarter of 2022 From Omdia

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According to the latest forecast of omdia display panel production and inventory tracking report – June 2022, the capacity utilization rate of global display panel manufacturers is expected to fall to 73% in the third quarter of 2022, which is a record low in the industry since 2012.

The price of LCD TV display panel fell to a new low in June, because TV manufacturers continued to reduce the demand for display panel in the second quarter of 2022 under pressure, and will further reduce the purchase plan of display panel in the third quarter of 2022. Samsung has just decided to stop purchasing from mid June to avoid a large amount of inventory in the channel. This decision may affect the entire display panel industry.

In order to cope with the significant changes in Samsung’s display panel and component procurement strategy, as well as the growing financial losses in the TV display panel business, significantly reducing its capacity utilization from June has become the best choice for display panel manufacturers.

According to omdia’s tracking report, in June and July 2022, the monthly capacity utilization rate of display panel manufacturers is expected to fall to 70% and 69% of the design capacity, respectively, the lowest in a decade. The previous record low was 77% in February 2020, when the market was weak due to oversupply, and then the outbreak of the epidemic stimulated sales.

The quarterly average capacity utilization rate in the second quarter of 2022 is also expected to hit a record low of 77%, and it is expected that the utilization rate will further decline to 73% in the third quarter of 2022.

Alex Kang, chief analyst of omdia, said: “The decline of capacity utilization directly leads to the increase of fixed costs, which eventually leads to the increase of production costs and the reduction of profits, which is also the reason why manufacturers try to avoid this situation at all costs. Despite the decline of production and profitability, the fact that display panel manufacturers still choose to reduce the capacity utilization shows that the current price decline is too sharp, which shows that panel manufacturers are trying to prevent further deterioration of profitability.”

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