Impact of US-China Trade Tensions Spurs IHS to Downgrade Its Flat-Panel Display Forecast
IHS Markit downgraded its forecast on 2019 flat-panel display area shipments, blaming U.S.-China trade tensions for the revision. It now expects shipments to grow 2.9 percent from last year to 227 million square meters (271.5 million square yards), down from its previous forecast of 5 percent growth.
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The flat-panel display market started 2019 “on a high note,” but the strong Q1 performance “was due to brands pulling-in orders,” said IHS. Many brands “accelerated their purchasing due to rising uncertainties over the trade dispute between the U.S and China,” it said. “Inventory in the supply chain has swelled, making buyers hesitant to purchase more panels, even in anticipation of the hot selling season in the second half of the year.”
Shipments of displays for LCD TVs, desktop monitors and laptops “exceeded expectations in the first quarter as threats mounted” over Section 301 tariffs on Chinese imports, said IHS. “Buyers and sellers hoped to avoid the impact of the tariffs by making purchases before they went into effect.” President Donald Trump delayed putting the List 4 tariffs into effect on TVs, laptops and other Chinese goods (see 1907010015).
Notwithstanding the tariff delay, trade “uncertainties” abound in the global economy and have grown in the second half of this year, and excess inventory “has become a burden” on the supply chain, said IHS. “With panel demand weakening, prices have begun to deteriorate.”
IHS forecasts the decreased panel prices “will be reflected in declining retail prices,” it said. As China’s Gen 10.5 fabs -- optimized for 65- and 75-inch TV screen sizes -- begin to stabilize and improve their production yields, “demand for super-large-sized products will help drive market growth,” said IHS. It’s forecasting that flat-panel demand in 2020 will rise 9 percent in area terms.