Smartphone display shipments show signs of recovery heading into 2H23

According to Omdia’s Smartphone Display Market Tracker – History – 1Q23 Pivot, actual smartphone display shipments in 1Q23 were at 332.3 million, denoting a continued year-over-year (YoY) decline of 9% from 355.4 million in 1Q22.

Smartphone display shipments were sluggish throughout 2022. This was because smartphone makers ordered large quantities of displays in 2021 due to an anticipated increase in demand for smartphones post-COVID-19. However, demand for smartphones in 2022 was negatively affected by the Russia-Ukraine conflict, which led to soaring crude oil prices and rapid inflation, as well as supply chain disruptions owing to lockdowns in Shanghai. As a result, total shipments for smartphone displays in 2022 decreased by 21% YoY.

However, the smartphone display market is showing signs of improvement in 2023. A few reasons for this include the threat of COVID-19 subsiding, the lifting of COVID-19 movement restrictions across the globe, and the eliminated risk of supply chain disruptions. Additionally, following the significant reduction in production in 2022, it seems that the inventory digestion of smartphone handsets and displays is in progress.

The decrease in the total number of smartphone display shipments in 1Q23 is due to a continuous decline in rigid AMOLED and LTPS TFT LCD shipments. On the other hand, as total smartphone display shipments continue to decline in 1Q23, shipments of flexible AMOLEDs and a-Si TFT LCDs saw an increase compared with 2022. Driven by strong sales of Apple’s iPhone 14 series, shipments of flexible AMOLEDs (which are installed in high-end smartphones) increased to 104.2 million in 1Q23, growing 28% YoY from 1Q22. Meanwhile, shipments of a-Si TFT LCDs (which are used in low-end smartphones) increased to 127.4 million in 1Q23, growing 4% YoY from 1Q22. Therefore, it seems that there is progress in the inventory digestion of both high-end and low-end smartphones.

Smartphone display demand is expected to be divided between high-performance or low-priced displays in 2H23

Based on smartphone display makers’ actual shipments in 1Q23, Omdia has generated the short-term forecast for smartphone display shipments in 2Q23 and 3Q23. Forecast results show that shipments of smartphone displays are expected to recover steadily from 2Q23 onward.

According to the shipment data in Omdia’s Smartphone Display Market Tracker – History – 1Q23 Pivot, total smartphone display shipments in 2Q23 is expected to reach 354.2 million, growing 4% YoY from 2Q22. Subsequently, shipments are expected to reach 385.6 million in 3Q23, a YoY growth of 22% from 3Q22, as shown in Figure 1.

1. Figure 1: Total smartphone display shipments and YoY growth, 2022–23 

However, the recovery of smartphone display shipments is expected to differ based on the type of technology. For instance, shipments of flexible AMOLEDs are expected to reach 129.3 million in 3Q23, up 41% YoY, and a-Si TFT LCD shipments are expected to reach 164.8 million, a 40% YoY increase from 3Q22. Meanwhile, rigid AMOLED shipments are expected to reach 29.6 million in 3Q23, down 20% from 3Q22. Additionally, shipments of LTPS TFT LCDs are expected to reach 61.9 million in 3Q23, decreasing 13% YoY from 3Q22. The growth of flexible AMOLED and a-Si TFT LCD as well as the decline of rigid AMOLED and LTPS TFT LCD display shipments may be owing to the inflationary economic environment.

Additionally, shipments of flexible AMOLEDs are expected to increase as a result of the release of Apple’s iPhone 15 series this fall. The price of the new iPhone 15 series is expected to increase because of its higher performance as well as an increasingly inflationary economic environment. Despite this, avid smartphone users will likely tolerate the increase in smartphone prices, replacing their old handsets with higher-end smartphones, like the iPhone 15, without hesitation.

However, given the economic conditions, ordinary smartphone users are more likely to curb their spending on smartphones. For instance, users of midrange smartphones (which primarily use rigid AMOLED or LTPS TFT LCD displays) may look to extend their smartphone replacement, which will lead to slower demand for these handsets and subsequently slow demand for the displays. Additionally, general users looking for new smartphones are likely to compromise on performance, prioritizing low-priced smartphones equipped with large screens, which is the domain of low-cost a-Si TFT LCDs. This trend means that smartphone display demand will be divided between higher-performance flexible AMOLEDs and lower-priced a-Si TFT LCDs smartphone displays.

Smartphone display demand by technology is still in flux moving into 2H23

As we move into 2H23, the trend and demand for smartphone displays by technology is still in flux. For higher-end displays, there is the question of how many high-end smartphones will replace their old phones, such as the iPhone 15, even as prices increase. Alternatively, will users prioritize lower-cost options and opt for midrange Android smartphones fitted with either rigid AMOLED or LTPS TFT LCD displays?

Strategy wise, LTPS TFT LCD makers may reduce their prices to recover and win orders for low-end smartphones, effectively competing with a-Si TFT LCD makers.

However, at present, it is difficult to predict the economic outlook in 2H23 and beyond given factors such as the continued chaos of the Russia-Ukraine conflict. While the smartphone display market is showing signs of improvement heading into 2H23, there are still many uncertainties to predict a full-scale recovery after 2023.