Small medium display market may contract by 11 YoY in 2022

According to Omdia’s Display Dynamics – April 2022: Smartphone display shipments expected to decline by over 10% YoY in 2022 article, there are concerns about how excess inventory and other global issues will cause a decrease in demand for smartphone displays in 2022.

According to Omdia’s Small Medium Display Market Tracker – History – 1Q22 Pivot, smartphone display shipments in 1Q22 reached 355.4 million but fell significantly by 20% quarter-over-quarter (QoQ) and eventually contracted 23% year-on year (YoY), thus resulting in excess display and handset inventories among smartphone makers. 

Unfortunately, the Chinese government’s efforts to prevent the spread of COVID-19 resulted in Shanghai’s citywide lockdown from April to May 2022, which in turn affected smartphone handset production. There is concern that smartphone display shipments will continuously decline in 2Q22. In addition, the outcome of the Russia–Ukraine crisis remains uncertain, and the resulting instability in energy supplies has led to rapid global economic inflation, which is in turn expected to reduce consumption during the 2022–23 Christmas and New Year sales season. Combined with the need to digest inventory and account for cooling demand, smartphone display shipments in 2H22 are unlikely to recover (see Figure 1).

After factoring in display makers’ forecasts and Omdia’s post-2Q22 estimates, smartphone display shipments are expected to contract significantly by 16% YoY in 2022.

1. Figure 1: Quarterly smartphone display shipments and forecasts, 2021–22

Source: Omdia

Majority of non-mobile phone applications to increase small medium display demand

On the other hand, small medium display shipments for several non-mobile phone applications are increasing following growing demand and sales as well as the easing of COVID-19 restrictions globally. The projected display shipments for various applications are listed below.

Smartwatch displays

 Shipments are expected to reach 225 million units, increasing 6% YoY. Despite the spread of COVID-19, smartwatch display shipments increased in 2021. Omdia assumes that the pandemic increased demand for health management devices. With easing COVID-19 restrictions, smartwatches are expected to increase in demand as an outdoor and athletic tool.

Automobile monitor displays

Shipments are expected to reach 197 million units, increasing 5% YoY. In 2020, COVID-19 damaged automotive production significantly, thus resulting in a large backlog in orders. Automotive makers have been trying to increase production to eliminate this backlog since 2021 but remain unable to do so because of shortages in the semiconductor supply chain.

AR, VR, and MR near-eye displays

Shipments are expected to reach 18.1 million units, increasing 57% YoY. Because of the growth of a new IT segment linked to the development of the “Metaverse,” demand for AR, VR, and MR headsets is significantly increasing because they are needed to access Metaverse services.

Mobile phone sub-displays

Shipments are expected to reach 14.8 million units, increasing 35% YoY. These are used to manufacture external displays for foldable phones; therefore, demand is increasing in line with foldable handset production.

E-book reader displays

Shipments are expected to reach 14.7 million units, thus increasing 5% YoY. E-book services expanded during the COVID-19 pandemic, and demand has been established and maintained among the many users of e-book readers. 

Other displays

However, small medium display shipments for mobile PCs are expected to fall to 88.1 million, thus decreasing 16% YoY. Specifically, the expected decreases for 2022 can be broken down as follows:

• Amusement: 16.0 million units (3% YoY decrease)
• Multifunction printers: 12.9 million units (5% YoY decrease)
• Digital still cameras: 8.1 million units (3% YoY decrease)

Overall, demand for in-house IT application displays and digital still cameras decreased in 2022, despite the easing of COVID-19 restrictions.

2. Figure 2: Changes in AMFPD shipment volumes for key applications, 2021–22

Source: Omdia

Small medium display shipments are expected to fall to 2.32 billion units, decreasing 11% YoY

Although demand for several applications is expected to increase, total small medium display shipments in 2022 will fall significantly because of a major drop in mobile phone display shipments—this is the core factor in small medium display demand. According to Omdia’s Small Medium Display Market Tracker – Forecast – 1Q22 Pivot, annual small medium active-matrix flat-panel display (AMFPD) shipments are expected to fall to 2.32 billion units—a concerning 11% YoY decrease.

Regarding display technologies, Omdia expects a significant fall in TFT LCD shipments, given excess inventory in the smartphone market. Total TFT LCD shipments (including a-Si, oxide, and LTPS displays) are expected to fall to 1.82 billion in 2022, thus decreasing 16% YoY. Meanwhile, total AMOLED shipments, including rigid and flexible LTPS as well as flexible low-temperature polycrystalline oxide (LTPO) devices, are expected to fall to 780 million units, therefore decreasing 1% YoY. Because of their high prices, the share of AMOLED inventory allocated to smartphones is assumed to be minimal, but the global economy’s rapid inflation led to weak demand for smartphone handsets, so total AMOLED shipments are expected to stop growing.

However, flexible LTPO AMOLED shipments are expected to grow to 206 million, thus increasing 63% YoY. Flexible LTPO AMOLED consumes lower power, hence its increase in demand over flexible LTPS AMOLED.

3. Figure 3: Annual small medium AMFPD shipments and forecasts, 2021–22

Source: Omdia

Although COVID-19’s spread seems to have subsided, global inflation caused by Russia’s invasion of Ukraine and the resulting surge in oil and material prices has led to significant fluctuation in demand for various applications, including small medium displays. There are great concerns that a protracted military crisis can cause further chaos; therefore, further attention should be paid to its impact on the world economy.