Chinese TFT LCD makers plan two-week production halt in October 2024

During the Chinese New Year holidays in February 2024, Chinese TFT LCD makers took an extreme countermeasure by pausing the glass substrate production to control inventory and reduce the risk of panel price crashes, especially for the LCD TV open cell. Although the official holidays last one week, many Chinese LCD makers took more than two weeks off to pause glass substrate production in their fabs, with some even halting their fab production for 20 days.

During regular operating hours, Chinese TFT LCD makers’ fabs are always in production. Even when operating at reduced capacity, a certain amount of glass substrates is continuously fed into the flow of the throughput in the workflow to maintain the equipment and facilities at a constant warm state. However, the complete shutdown of the fabs during the February 2024 Chinese New Year holidays indicated the determination of the LCD makers to manage the risk of panel price collapse by reducing panel production.

The market demand rebounded after February. LCD TV brands and OEMs rushed to provide demand forecasts and panel orders to panel makers, resulting in LCD TV open cell prices reaching their highest levels in 2Q24 over the past two years.

However, as demand for LCD panels in 2H24 decreases owing to the inventory control by LCD TV brands and OEMs, Chinese TFT LCD makers are planning to duplicate the same production pause strategy implemented in February. This time, they will target the National Day holidays from October 1 to 7.

Several Chinese TFT LCD makers will close their fabs from the end of September to the beginning of October. This closure will not only include time off for the employees but also involve shutting down the equipment and facilities. While the official vacation period is one week, from October 1 to October 7, several fabs will have a longer closure. Some fabs will continue their IT LCD panel production, but LCD TV open-cell panel production will be stopped during this time. It is expected that the utilization rates of these TFT LCD fabs will be reduced throughout October 2024.

As the prices of LCD TV open cell and IT LCD panels start to fall in 3Q24, LCD makers are aiming to reduce their capacity utilization rates in October to prevent the downward trend from extending to 4Q24.

Table 1: Chinese LCD fabs shutdown schedule during the National Day holiday

Omdia has identified the reasons for the two-week shutdown of Chinese LCD fabs in October as follows:

·   LCD TV open cell prices are expected to drop in 2H24, particularly in 3Q24

·   Slow-moving inventory, especially for LCD TV open cells and some monitor panels

·   Risk management, particularly concerning the potential further downward adjustments in demand

·   To communicate with LCD TV brands and OEMs about their strong intention to control production and stabilize panel price

·   To leverage the cost of LCDs owing to price increases in several components and materials, especially glass substrates

To read more insights and analysis covering market trends and industry forecasts prepared by Omdia’s Display practice, click here.