Recently, there has been a strong trend of price increases in the display industry market. People have clearly felt that small and medium-sized panels have warmed up, and there is a strong rebound in prices, with the supply chain reporting severe shortages. In response to this, this article will continue to track the reasons for changes in panel prices and what actions the supply chain will take.

Since March of this year, panel prices have started to rise with signs of shortage. Until now, almost every small and medium-sized panel has seen an increase in price, with some sizes experiencing an increase of over 200%. The price will continue to rise. Based on the current trend, the upward trend of LCD panel prices in July has become a foregone conclusion. The industry predicts that this round of price increases will inevitably continue until the end of the third quarter.

Due to the continuous rise in prices, downstream contract manufacturers and brand factories continue to pull in goods. Domestic and foreign panel factories have clearly felt the traditional peak season effect of the third quarter, which has led to urgent orders and insufficient production capacity. Shenzhen Tianma, a small and medium-sized panel factory, stated that panel prices have increased and the company's production capacity is insufficient. The current strategy is to give priority to customers with high prices and good mobile phone projects for supply.

According to the report and combined with reality, the author has compiled the following reasons for the increase in panel prices:

1. Insufficient production capacity after production reduction. In the past two years, due to the slowdown in sales/shipment of smartphones, tablets, and other products, the profits of supply chain manufacturers have further declined, resulting in a backlog of inventory. This has led to a continuous decline in prices of small and medium-sized panels, even reaching a bottom, and manufacturers can only reduce production. Later, due to the push from Apple screens to adopt AMOLED, manufacturers began to shift towards AMOLED, resulting in a significant reduction in production capacity for small and medium-sized screens.

2. Samsung in South Korea and JDI in Japan have closed their factories repeatedly, resulting in tight production capacity. Samsung originally had eight LCD panel lines, but in order to upgrade to OLED, Samsung has closed four production lines; At the beginning of this year, JDI shut down two low generation panel cables in one go; Taiwan Zhonghua Film also closed one of its 4.5-generation lines.

3. The influence of natural factors. The severe earthquake in Taiwan this year, coupled with the factors of panel process conversion of panel factories, led to some capacity losses. Downstream manufacturers began to increase their procurement efforts from enterprises in Chinese Mainland, breaking the current situation of oversupply in mainland China.

Industry insiders say that due to the inability of closed LCD factories to resume production and panel manufacturers continuing to increase OLED development and transition to high-end products, the short-term price increase problem will not be solved, and the price increase cycle for small and medium-sized LCDs is bound to continue. At present, downstream manufacturers have strong demand, and prices will continue to rise at least in the third quarter of this year. This trend is expected to continue until the second quarter of next year.

Although there is still a trend of continued price increases for LCD panels, the competition in the panel industry is still fierce. For mainland enterprises, this price increase may be the most beneficial. However, from the overall perspective of the panel industry, the quality level of Korean and Taiwanese panels is still higher than that of mainland China. Therefore, seeking differentiation and improving competitiveness is the best strategy for the development of mainland China's display industry, and it is also a long-term way to establish a leading position in the industry.