Affected by the epidemic, Samsung shows that SDC is speeding up its process of shutting down LCD production capacity and switching to OLED production. The plan of three large LCD panel factories in South Korea will be advanced to the fourth quarter of 2020, including Suzhou 8.5 generation line, which has not been reported to shut down before.In 2019, SDC's capacity area of over 7 generations of large-scale LCD in South Korea accounts for about 12.2% of the world's total, and the proportion of 8.5 generations of LCD in Suzhou is as high as 15.7%. Closing the plant ahead of time is bound to have a huge impact on the global panel supply structure.
According to Korean media EBN, SDC will close the factory in advance and sell LCD production equipment of Korean production line. When l7-1 was closed in 2016 and part of l8-1 production capacity was closed in 2019, some equipment was sold to some manufacturers who want to enter LCD industry quickly. However, under the pressure of industry expansion, it may be difficult to find a suitable buyer and choose to abandon directly. Suzhou plant is in good condition and may be sold to Chinese companies as a whole.
The early closure of SDC means that the global large-scale LCD panel will shift from the accelerated competition between China and South Korea to a dominant situation in mainland China. In the global LCD production lines with more than 7 generations, the proportion of the capacity area of Chinese manufacturers will further increase from 44.8% in 2019 to 53.3% in 2020. With the gradual completion of the closing of SDC plants, the proportion will also leap to 65.3% in 2021.
Samsung LGD's factory in China is not included in mainland China manufacturers, but included in mainland China in the figure:
Figure: global trend of large LCD panel production area by region, source: cinno Research (including panel factories of foreign companies in China)
From the end of 2019 to February 2020, the price of large-scale LCD panel had a trend of price recovery for several months. After 2020, the epidemic broke out in China and South Korea in the early stage, which made the industry worried that the LCD display supply gathered in the two countries would be seriously affected. Therefore, the downstream started the mode of hoarding. It was once said that Samsung might take a more gentle way of production reduction, so as to For this round of panel price increase.
With the development of global epidemic, the supply chain has to make the fastest response decision. Since March, the epidemic situation in mainland China has been gradually controlled, and the production has been resumed actively. South Korea has also taken very strict control measures. The panel supply has not been greatly affected. However, the number of infected countries in the world has increased sharply, especially in Europe and the United States, which has rapidly deteriorated beyond expectations, leading to the cancellation of many international events and exhibitions. Many countries have begun to close international routes and blocked international trade exchanges , seriously affecting the supply side and the demand side.
The dramatic reversal of supply and demand led to a drop in the price of large-size LCD panels in March. With the development of the epidemic, the drop is expected to continue to expand, and the price of large-size LCD panels will be explored again. SDC may decide to shut down LCD production ahead of time just because of this concern.
CINNO At the beginning of 2020, research has made three kinds of predictions on the closing of Korean enterprises. At present, the situation is closer to the conservative prediction, that is, the global economic instability caused by the epidemic continues to worsen, greatly weakening the LCD demand. Even if Korean enterprises rapidly cut off their LCD production capacity, the LCD supply-demand ratio will further rise in 2020, seriously oversupply, resulting in the panel price and the panel manufacturer's rate of activity The panel factories with low cost and small scale are under great pressure. Whether the product structure can be adjusted in time, adapt to the special display demand under the epidemic situation, and maintain good cooperation with customers and supply chain will become the key to the survival of panel factories under the background of the epidemic.
News source: EBN
Data source: cinno research