Chinese LCD Producers Cutting Outputs due to Stop Decline in LCD Prices

China’s BOE has decided to reduce its LCD output by up to 25 percent to stabilize LCD panel prices.

As prices of liquid crystal display (LCD) panels continue to fall, Chinese LCD producers are beginning to cut their output to ease the downturn. 

China’s BOE, which rank first in the world in terms of LCD shipments this year with an 18.2 percent market share, has decided to reduce production. The company has started reducing production of the 10.5-generation LCD lines by 25 percent from July and production of other LCD lines by 10 percent. China Star Optoelectronics Technology (CSOT) and HKC have also lowered the operating rate of the 8.5-generation LCD lines by 10 percent and 20 percent, respectively.

In addition, the Chinese government will reduce support. Chinese display firms have been increasing the production of LCDs with subsidies from the local governments. However, the Chinese government has decided to change its support measures as the combined share of Chinese companies in the LCD market is about to surpass 50 percent and the competition for extension among Chinese companies has become fierce.

Accordingly, market experts said that Chinese display manufacturers are highly likely to give up on the excessive competition in plant expansion and additionally alleviate the oversupply. China’s share of the global LCD market is expected to increase from 29 percent in 2016 to 54 percent in 2020.

As Chinese companies, which have flooded the market with their products at a low price, are seeking to reduce the production of LCDs, the decline in price of LCD panels will gradually will be eased. The price of 32-inch and 55-inch LCD TV panels stood at US$33 (39,300 won) and US$106 (126,340 won) as of August, down 20 percent and 26 percent, respectively, from the beginning of the year, according to global market research firm IHS Markit.

Staring with the reduction of LCD production amid sluggish sales, the South Korean display industry is seeking to improve its constitution by converting to organic light emitting diode (OLED) business.