Omdia: panel makers increase fab utilization plans by three consecutive months and maintain 80% utilization rate in 1Q 2025

Rhea-AI Summary

Display panel manufacturers have shown consistent increases in fab utilization plans during Q4 2024, reaching 77% by November and rising to 79% by December's end. Plans for Q1 2025 have been further revised upward to 80% utilization, with January 2025 seeing a notable six percentage point increase.

The surge is primarily driven by increased demand for special TV panels, stimulated by China's 'Swap Old for New' subsidy program. Additionally, anticipated tariff risks under the new US administration have temporarily boosted LCD TV panel demand, with Chinese TV makers increasing inventories in Mexico for US market shipments.

Major Chinese panel makers like BOE, China Star, and HKC Display are leading this trend. Some facilities have even cancelled planned Lunar New Year holidays to maintain high utilization rates, though manufacturers remain cautious about long-term demand trends.

Positive

• Fab utilization rates increased from 77% to 79% in Q4 2024, with further increase to 80% planned for Q1 2025
• Strong demand growth driven by Chinese government's subsidy program
• Increased inventory building in Mexico for US market shipments
• Expected price hikes for LCD TV panels in H1 2025

Negative

• Risk of component shortages, particularly driver ICs and polarizers
• Uncertainty in mid to long-term demand trends
• Potential impact from new US tariff risks

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LONDON, Jan. 16, 2025 /PRNewswire/ -- The latest analysis from Omdia has found that display panel makers consistently raised their fab utilization plans throughout the fourth quarter of 2024 and by the end of November, the quarterly utilization plan for Q4 was 77%. By December's end, plans had been revised upward by two percentage points to 79% with a further revision of four percentage points for 1Q 2025, bringing quarterly utilization to 80%. In particular, January 2025 fab utilization plans rose by six percentage points, according to Omdia's latest Display production & Inventory Tracker – December 2024.

"The upward revision of fab utilization plans is mainly driven by increased demand for special TV panels spurred by Chinese government's 'Swap Old for New' subsidy program, which is yet to be fully realized. Leading China TV makers are positioning themselves to capture greater market share during this surge in demand by securing additional TV panels." said Alex Kang, Principal Analyst of Omdia.

"The anticipated tariff risks under the newly elected US government have temporarily driven up demand for LCD TV panels, impacting panel makers' fab utilization plans. Some China TV makers are increasing their TV inventories in Mexico to facilitate shipments to the US market. Additionally, the rush orders have also heightened the risk of component shortages, such as driver ICs (integrated circuits) and polarizers, especially for IT LCDs manufacturing. Concerns over these supply issues have further fueled demand, leading to additional upward revisions in fab utilization plans," added Kang.

The upward revision of panel makers' fab utilization plans has been led primarily by major Chinese panel makers, such as BOE, China Star, and HKC Display. These panel makers are more significantly impacted by the Chinese government's subsidy program due to their higher share of LCD TV panel production and supply to China TV makers.

Initially, Chinese panel makers had considered taking the two-week holidays during Lunar New Year at the end of January 2025 and reduce LCD TV panel production to maintain bargaining power over panel pricing. However, with increased panel demand and expected price hikes for LCD TV panels in the first half of 2025, some fabs have cancelled the holiday plans entirely, opting instead to sustain high utilization rates.

"Despite the current pull-in demand and strong utilization rates, panel makers remain cautious about mid to long-term demand trends. They may revert to production-to-order strategies once this demand surge subsides," concluded Kang.

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Omdia, part of Informa TechTarget, Inc. (Nasdaq: TTGT), is a technology research and advisory group. Our deep knowledge of tech markets combined with our actionable insights empower organizations to make smart growth decisions.

Contact

Fasiha Khan: fasiha.khan@omdia.com

 

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SOURCE Omdia

FAQ

What is the expected fab utilization rate for Q1 2025 according to Omdia's latest report?

According to Omdia's report, panel makers plan to maintain an 80% fab utilization rate in Q1 2025, following a four percentage point upward revision.

How has China's 'Swap Old for New' subsidy program affected panel makers?

The subsidy program has increased demand for special TV panels, particularly benefiting Chinese panel makers like BOE, China Star, and HKC Display due to their higher share of LCD TV panel production.

Why are Chinese TV makers increasing their inventory in Mexico?

Chinese TV makers are building up inventory in Mexico to facilitate shipments to the US market, responding to anticipated tariff risks under the newly elected US government.

What supply chain risks are panel makers facing in early 2025?

Panel makers are facing risks of component shortages, particularly in driver ICs (integrated circuits) and polarizers, especially for IT LCDs manufacturing.

How are Chinese panel makers handling the 2025 Lunar New Year holiday period?

Some Chinese panel makers have cancelled their planned two-week Lunar New Year holidays to maintain high utilization rates due to increased panel demand and expected price hikes.