Profit margins for 32-Inch LCD Panels, a Key Display Revenue Generator, to Decline Steeply, IHS Says

Commodity LCD displays, led by 32-inch high definition (HD) displays, have in the past been a key industry revenue generator, but that situation is changing, according to IHS Inc. (NYSE: IHS), the leading global source of critical information and insight. Industry profits for 32-inch panels increased by 24 percent, year over year, in the first quarter (Q1) of 2015, but they are expected to decrease by 22 percent in Q1 2016.

“Most LCD TV panel prices began to fall after the first quarter of this year, and prices will reach their lowest level in the second quarter of 2016,” said Yoshio Tamura, senior director of research and analysis for IHS Technology. “Since equipment depreciation cost is factored into 8th-generation fabs, the total LCD profit margin is expected to turn negative next year.”

According to the IHS Large Area Display Cost Model Report, LCD panel makers are increasing their capacity in China, with 8th-generation fabs that mainly produce displays of 32 inches, 48 inches, 49 inches and 55 inches. As profit margins fall for 32-inch LCDs, manufacturers are expected to shift their 32-inch LCD production to larger sizes, thus reducing prices and increasing demand for displays larger than 48 inches.