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Will China power shortage help LCD prices?

The power crisis in China has reduced the output of LCD panels used for TVs. With the panel price expected to return to normal, South Korean companies such as Samsung Display (SDC) and LG Display (LGD) are set to benefit.

According to a report by South Korean media outlet Chosun Biz, the average price of LCD panels for TVs in the early half of November 2021 compared to the latter half of October 2021 fell 2.3% for 32-inch, 1.1% for 43-inch, 3.2% for 55-inch, 2.2% for 65-inch, and 1.4% for 75-inch. Although the prices of LCD panels for TVs continue to fall on month in November, the scale was smaller compared to those of earlier months.

LCD panel prices soared during the period between the start of 2020 and the end of first-half 2021 thanks to consumers' increased spending on TVs in the wake of the COVID-19 pandemic. However, panel prices started to fall after July 2021 as global TV demand began decelerating and China-based panel manufacturers are keenly pushing capacity expansions. Many market observers originally expected panel prices to plunge further in the first half of 2022.

However, panel prices improved when power cuts in China began in September 2021. The China government implemented a power rationing that interrupted the production of SoCs for TVs, timing controllers (TCON) and driver display ICs (DDI). As a result, there was a reduction in panel production in China at the end of October 2021. The panel production cut in China is expected to continue for some time.

The decline in panel production has now led to an expectation that the prices of LCD panels for TVs will improve in 2022. Related industry sources also expect the Beijing Winter Olympics, Hangzhou Asian Games and FIFA World Cup, all to be held in China in 2022, to increase panel demand, which could also be an opportunity for the prices to pick up.

Since prices of panels for large-sized products usually rise faster and fall slower, South Korea-based display companies, which mostly focus on large-size panels over 65-inch, are expected to enjoy an improvement in profitability with the rising prices.