(Image credit: Samsung)
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Source: www.tvtechnology.com, June 2020

Current events are having a “Darwinian” effect on the industry

Tech-enabled advances in monitor display technologies have been transforming several industries—sports & entertainment, consumer electronics and automotive. Flat panel displays have been a primary customer choice over the past few years, as they are extremely thin and lightweight. In addition, flat panel displays are seeing greater preference over traditional cathode-ray tubes (CRT), given their more pixel support resolution, wider contrast setting options and reduced energy consumption.

In the consumer electronics industry, flat panel displays are becoming an integral component of devices such as desktop monitors, smartphones, laptops, televisions and digital cameras. Furthermore, the advanced electronic viewing technology is finding immense use in the automotive industry in the human-machine interface (HMI), and in the education industry in interactive touch-based devices.

The flat panel display market in the United States has been growing at a healthy pace. However, the coronavirus (COVID-19) pandemic is having Darwinian effects in almost every industry in the country, and the flat panel displays market is no exception. One of the major consequences of the pandemic entails faltered consumer accessibility.

From grocery and other daily essentials to consumer electronics and automobiles, limited accessibility will have a negative impact on the U.S. economic structure in the immediate future. With manufacturing units closed down, TV and smartphone sales slumping and exports on a continuous decline, the domestic flat panel display market is also facing the brunt of the COVID-19 pandemic.

As uncertainty continues to hang about the recovery point, the flat panel display market is also witnessing an abrupt exit of giants such as Samsung Display and LG Display from LCD (for TV) production markets. This would cause an inevitable drop in the U.S. flat panel display production capacities in the short term.

THE U.S. RELIES ON CHINA

The U.S. flat panel display market has been sustaining the brunt of the COVID-19 impact as it heavily relies on China for its colossal manufacturing capacities in smartphones and other consumer electronics products. The regional market’s supply is significantly dependent on China, which accounts for about 70% of mobile phones and about 90% of computer production in the world.

For instance, Foxconn, manufacturer of Apple’s iPhone, had to halt assembly-line production as a response to the COVID-19 pandemic. As such, although Apple moved forward to cautiously restart the production, it warned that it does not hope to reach its own revenue target for the Q2 of 2020. Apparently, every electronics product comprises of Chinese-manufactured components.

Even though the public health crisis was mostly confined to China earlier this year, it was cited as a supply chain interruption much similar to an earthquake or a flood. During the earlier disruptions of such kinds, the flat panel display market players in the U.S. had realized that securing the essential components required walking the extra mile. Yet, businesses still functioned relatively normally. That changed as the COVID-19 pandemic expanded its global reach. Impacts on the supply side diminished as China got back on its feet.

TRACING THE WAY FORWARD

Comparing the COVID-19 pandemic with the 2008-2009 economic recession, it looks like the drop in the prices of flat panel displays played as a booster to market growth for the coming one year, and the market, in fact, witnessed flat panel display shortages in 2010. This recession has occurred just when the flat panel display market was already suffering from prices, underutilization of OLED and huge losses in the LCD segment.

And only when the investors in the flat panel display market were expecting a slight upswing in the market revenue, the pandemic hit hard. Although incumbents in display manufacturing have put productions on standstill and are downsizing at company levels, the exact impact of this public-health crisis on the global display industry is on the demand side instead of the supply side. The sudden hike in demand for flat panel TVs during the Q1 of 2020 offered a dynamic ecosystem for a while, yet it ultimately dipped too, with crashing TV sales.

Last year—2019—witnessed a huge supply of TV panels that eventually resulted in a massive decline in prices. The overcapacity was supposed to be used up in 2020. That said, the pandemic has compelled the market players to devise strategies from scratch. Leading distributors of bezel-less displays, large-sized displays and foldable flat panel displays have to keep up with the evolving industry trends during and after the COVID-19 chapter, utilizing reduced costs.

Smart TV sales have been maintaining a positive trend over the recent past, offering a fertile ground for flat panel display manufacturers in the U.S. in the immediate term. If the public health response in the U.S. against the pandemic is stronger and more successful—flattening the coronavirus curve within two to three months—the outlook could be more favorable, with financial recovery by Q3 of 2020.

Going forward, the future for the advanced technology flat panel displays seems promising. While the sales of small and medium-sized TV panels will drop post pandemic, OLED and flexible OLED will perform well, as they would play a huge role in keeping the prices intact to a definite extent.

Insights presented in the article are based on an ongoing study of Future Market Insights (FMI) on the COVID-19 impact on flat panel display industry.

Dhaval Kate is Research Manager Electronics, Semiconductors, and ICT for Future Market Insights.