Samsung's suspension of procurement has been extended to August, with the peak demand season not booming, which has hit a new low in the global panel industry in a decade. On July 11, news that Samsung Electronics extended the suspension of procurement until August spread.

Samsung suspension of procurement has been extended to August, and the peak demand season has slowed down, causing the global panel industry's capacity utilization rate to hit a new low in ten years.

htmlOn July 11, news that Samsung Electronics extended the suspension of procurement until August spread. Wang Yuhong, COO of Luotu Technology (RUNTO), told the reporter of First Financial that it is true that Samsung has extended the suspension of procurement time. A reporter from the First Financial Daily asked for confirmation from the person concerned in Samsung China , and the other party said there was no official information at present.

Wang Yuhong said that Samsung has cut and reduced panel purchase orders several times this year. In the first half of this year, Samsung Electronics has reserved panel inventory by Samsung Display (SDC), but compared with the market level, it is both high-cost inventory. Therefore, next, Samsung will reduce or even stop purchasing orders to deal with inventory digestion and its already determined annual shipment plan; on the other hand, it will balance the high-cost inventory from the open market to purchase lower-priced panels. The high-profile suspension information released in the market this time is also part of the procurement strategy.

"Samsung Electronics has stopped purchasing parts including panels since mid-June. It did not resume procurement in July, and suppliers only had sporadic shipments. Samsung Electronics has a great determination to control inventory. It will stop purchasing for one and a half months in June and July, and it is expected that it will resume procurement in August and September." Zhang Hong, research director of the TV business department of Sigmaintell, told the First Financial reporter that due to this, the panel factory has launched the largest production cut in history.

Zhang Hong estimated that compared with the largest equipment production capacity of panel factories, in June and July this year, the global LCD TV panel factories reduced production by about 25%. During the last round of price decline cycle, some panel factories slightly reduced their capacity utilization rate in 2019, with production cuts of less than 10%, and not all panel factories reduced production. Looking back, the output cuts were also very large during the financial crisis in 2008, but there were still few LCD TV panels at that time; after 2008, LCD TV panel manufacturers occasionally reduced production, but the output cuts were within 10%.

Omdia's research report on July 11 also showed that according to its latest forecast in June 2022, the capacity utilization rate of global display panel manufacturers is expected to drop to 73% in the third quarter of 2022. In June and July 2022, display panel manufacturers' monthly capacity utilization is expected to drop to 70% and 69% of designed capacity, respectively, the lowest in a decade. The last historical low was 77% in February 2020, when the oversupply caused market weakness, and then the epidemic stimulated sales.

" LCD (LCD) TV panel prices fell to a new low in June because TV manufacturers were under pressure to continue to reduce panel demand in the second quarter of 2022 and will further reduce panel procurement plans in the third quarter of 2022. Samsung decided to stop purchasing from mid-June to avoid large inventory in the channel, which may affect the entire panel industry." Omdia's research report believes that significantly reducing capacity utilization from June has become the best choice for display panel manufacturers.

Following Samsung, Dell has also cut orders for panel purchases recently. Public information shows that Dell's third quarter orders for monitors and laptop panels have been reduced by 50% since July, including BOE , LGD, AUO, Qunchuang, TCL Huaxing , Sharp , etc., all have been affected. Xie Qinyi, research director of Omdia monitors, predicts that the global average panel capacity utilization rate will drop to 80% in June and will drop below 75% in the third quarter, which may hit a low since the 2008 financial crisis.

just repurchased the 10th generation LCD panel production line of Sakai Factory in Japan back to the listed company Sharp. Recently, it has asked Sakai Factory to significantly reduce its output in the 10th generation line and only maintain daily sample production. This action is expected to last for 1-2 months. Research firm AVC Revo posted on July 11 that it confirmed the news from Sharp and its suppliers, and believed that "after the panel price fell below the cash cost, it gradually approached the material cost, and panel factories faced a situation where more production and more losses were made. It is not ruled out that other panel factories would take more radical production cuts, or many Miro domino effects were on the way."

Platform, TCL Huaxing, Huike and other panel factories are also reducing production.According to a research report by Qunzhi Consulting, BOE mainly reduces the capacity supply of the 10.5th and 8.6th generation lines; TCL Huaxing mainly reduces the supply of 65- and 75-inch panels; Huike began to control production capacity in June, and the capacity climb of the new line slowed down; Taiwan panel factories in China accelerated the shrinking of TV panel business; Samsung closed the LCD panel line in June.

not only reduces production in LCD panel factories, but also reduces production in OLED panel factories. LGD's OLED panel shipment in 2022 will be far lower than expected, and the capacity utilization rate of South Korea's 8.5-generation OLED panels will begin to be gradually reduced in the second quarter. Global OLED TV panel shipments are expected to be 8.88 million in 2022, a year-on-year increase of 15%, but the increase is lower than expected.

Zhang Hong expects that LCD TV panel prices will continue to decline in the third quarter. It is recommended that panel manufacturers increase production cuts in the short term and actively promote cost reduction and efficiency improvement.

html On the morning of July 12, BOE (000725.SZ) fell 0.26% to 3.86 yuan per share; TCL Technology (000100.SZ) fell 0.22% to 4.64 yuan per share; Shenzhen Tianma (000050.SZ) fell 1.22% to 9.73 yuan per share; Visionox (002387.SZ) fell 2.04% to 6.24 yuan per share.