In 2022Q3, the panel capacity utilization rate will drop to the lowest in 10 years

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Under the multiple pressures of global inflation, bleak macroeconomic prospects weakened consumer market demand, and the COVID-19 epidemic, the PC market outlook is full of uncertainties. Recently, quite a number of manufacturers have revised their target shipments and expected revenue this year.

The latest report released by market research firm Omdia shows that panel makers have adjusted their capacity utilization rates for the fifth consecutive month. Among them, the overall capacity utilization rate in June 2022 was 70%, a month-on-month decrease of 8%, which fell to a new low in nearly 10 years; the overall capacity utilization rate in July was 66%, a month-on-month decrease of 4%. Panel makers originally expected to increase the utilization rate from August, but the increase is very limited at present. Omdia expects that the average utilization rate of panel capacity in the third quarter of 2022 will drop by 8% from the second quarter to 69%, which will be a quarterly low in nearly 10 years.

PC manufacturers will continue to reduce purchases, so panel manufacturers have adjusted their production line production plans accordingly. Samsung has announced the temporary purchase of TV panels, and some brands have also significantly lowered their purchases in the third quarter of 2022. In addition, panel makers will have to bear the uncertainty of the market in the second half of 2022, as well as the inventory pressure caused by overcapacity in the past.

At present, manufacturers are using various ways to speed up inventory jokes, hoping to reduce inventory in the third quarter of 2022. If in the quarter, the progress of reducing inventory is slower than expected, panel makers are likely to continue to reduce the utilization rate of panel capacity. This has led to a downward trend in the prices of panels, whether for TVs or PCs, and this trend is expected to continue into the fourth quarter of this year.

The profits of panel makers have also fallen sharply. If this situation cannot be improved, some panel makers may speed up the reorganization of old production lines. It has been seen before that Samsung decided to end the last 8.5-generation LCD panel production line in South Korea six months ahead of schedule and completely withdraw from the LCD business, and such things are likely to continue to happen.

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