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Recently, domestic panel manufacturers have successively announced their performance forecasts for the first half of 2024. Compared with last year's low cycle, this year's panel industry's revenue showed an overall growth trend in the first half of the year.

Leading manufacturers BOE and TCL Technology both expect their net profit attributable to their parent companies to grow by three digits year-on-year, while Visionox and Shenzhen Tianma are seeing their losses narrow. From the data in the first half of the year, the industry is gradually recovering, but there are also views that demand will still be under pressure in the second half of the year.

Li Yaqin, general manager of Sigmaintell, told the 21st Century Business Herald: "We predict that the sales of the entire panel industry will rebound this year, and we expect the sales of the entire industry to increase by 14% year-on-year."

In comparison, according to a Qunzhi Consulting report, global display panel revenue in 2023 will be US$93.46 billion, down about 7.6% from 2022. From the data of the past two years, it can also be seen that the prosperity of the panel industry is recovering this year.

The report also stated that 2024 will be the turning point for the panel industry from decline to growth, and promoting the value growth of upstream and downstream collaboration in the industrial chain is crucial to the long-term growth of the panel industry.

At the same time, Li Yaqin also pointed out that the contradiction between regional and national policy stability, insufficient demand and costs brought about by the struggle between major powers will still be challenges facing the industry.

Many companies expect to see an increase in first-half performance

Specifically, BOE's 2024 semi-annual performance forecast stated that it expects to achieve a net profit attributable to shareholders of listed companies of 2.1 billion yuan to 2.3 billion yuan, an increase of 185% to 213% over the same period last year; non-net profit is expected to be 1.45 billion yuan to 1.65 billion yuan, compared with a loss of 1.58 billion yuan in the same period last year, the company has turned losses into profits in the first half of this year.

BOE said that during the reporting period, the semiconductor display industry was booming, the industry structure continued to optimize, and the company's operating conditions improved year-on-year. In terms of LCD (liquid crystal display), large-scale sports events and e-commerce promotions in the first half of the year drove the demand for stocking up by end customers, especially the demand for TV panels was released in advance. By the end of the second quarter, the peak of stocking up ended. At the same time, the prices of TV products rose significantly in March and April, and then the increase narrowed; the prices of some IT products gradually recovered, and the trend of large size promoted the growth space of average size.

In addition, in terms of AMOLED, as the penetration rate of AMOLED products continues to rise, BOE's flexible AMOLED product shipments continued to grow year-on-year in the first half of the year. Faced with the increasing depreciation pressure in the short term, BOE will continue to improve its technology level, match market demand, and enhance its overall competitiveness.

TCL Technology also expects profit to rise in the first half of the year. The financial report shows that TCL Technology expects net profit attributable to shareholders of listed companies to be between 950 million yuan and 1.05 billion yuan in the first half of the year, a year-on-year increase of 180% to 210%; and non-net profit is expected to be between 500 million yuan and 600 million yuan, a year-on-year increase of 183% to 200%. Compared with the loss of 600 million yuan in the same period last year, this year's loss has turned into a profit and has increased significantly.

The growth was mainly driven by the display panel business. TCL Technology expects the business to achieve a net profit of 2.58 billion to 2.88 billion yuan, an improvement of more than 6 billion yuan year-on-year, of which the second quarter is expected to achieve a net profit of 2.04-2.34 billion yuan. Based on the scale and production line layout, TCL Technology said that it continued to optimize its business and product structure, high-end large-size business, and continued to improve small and medium-size business, and the company's operating performance has grown significantly.

However, Visionox and Shenzhen Tianma still suffered losses in the first half of the year, but the overall losses are gradually narrowing. Visionox said in its performance forecast that it expects to lose 1.1 billion to 1.45 billion yuan in the first half of the year, an increase of 11.27% to 32.69% year-on-year; while Shenzhen Tianma expects to lose 420 million to 560 million yuan, a year-on-year increase of 60.68% to 70.51%.

Shenzhen Tianma stated in the report that the main reason for the performance change was the rapid recovery of profitability in the consumer display business. The profit of the smartphone display business, which accounts for a relatively high proportion of revenue, has improved significantly year-on-year. In addition, the shipment volume of flexible AMOLED mobile phone display products has continued to grow year-on-year, and the profitability of the Wuhan AMOLED production line has improved.

It can be seen that the performance of domestic panel manufacturers in the first half of the year was generally upward, and the loss-making manufacturers also improved. In this regard, Li Yaqin analyzed that the overall sales of the panel industry are growing this year. First of all, the total shipment scale has rebounded slightly this year, especially driven by the first round of replacement demand after the epidemic, the demand for panels for consumer electronic products such as laptops, monitors, and tablets has increased slightly.

Secondly, the rational return of prices. "We can see that with the change of manufacturers' competitive strategies, from scale to profit-centered, the production control and price stabilization strategies have led to the price return of some applications, especially in LCD TV panels. Therefore, this growth in the panel industry is unbalanced, which is reflected in individual differences among specific manufacturers."

The industry still faces two major challenges

Although the forecast data for the panel market this year is relatively optimistic, there are still some challenges under the macroeconomic situation.

Li Yaqin analyzed two major challenges to the reporter. The first is related to the stability of regional and national policies brought about by the struggle between major powers. For example, tariffs and bans will bring about short-term sharp fluctuations in regional market demand or downstream customer demand.

The second is the contradiction between insufficient demand and cost. "The current macro-environment still has a relatively unfavorable impact on consumer confidence. Consumer confidence or purchasing power in most regional markets around the world is low. However, the rising cost of the whole machine is in contradiction with this. This makes terminal promotions unsustainable, which in turn poses a challenge to demand growth." Li Yaqin said.

When talking about how companies should respond, Li Yaqin said that regardless of whether it is a panel or semiconductor company, according to Qunzhi Consulting's "Technology Industry Growth Flywheel Model" research, in this challenging macro environment, the growth of a single flywheel cannot drive the operation of the entire growth flywheel of the technology industry. It is recommended that each company needs to establish a collaborative growth model in order to transform its own growth into collaborative growth across a single growth flywheel.

In addition, AI is a hot word in the industry this year, and whether it can bring growth to the panel industry has also attracted much attention. With the development and implementation of AI devices, some believe that this year is the first year of AI on the edge. The diversified terminal product forms and the new round of replacement demand will bring a new cycle of favorable growth to the panel market.

However, Li Yaqin believes that the computing power, large model capabilities and content ecology of edge AI devices are all improving, and currently have little impact on the panel industry this year. "It is expected that 2025 will be a key time for the improvement of edge AI computing power, and the boost to the panel industry will gradually emerge from 2025 to 2026."

She further said that the growth points are mainly reflected in two aspects. On the one hand, the demand for mid-to-high-end panel technology is growing, which will promote technological innovation and iteration. On the other hand, the scale of replacement and the growth of user groups are growing. There are many emerging technology application directions worthy of attention, such as edge AI promoting the penetration and demand growth of OLED technology in the IT application market and driving the demand growth of VR panels. For example, as a port for AI to interact with users, the application of cameras in PC products will also be driven.

In particular, the trend of OLED technology spreading from mobile phones to PCs is promising. According to Omdia's latest "Large-size Display Panel Market Tracking Report for the First Quarter of 2024", shipments of large-size OLEDs above 9 inches are expected to increase by 124.6% year-on-year in 2024.

Su Jinguan, senior principal analyst of Omdia Display Research, pointed out that shipments of all large-size OLED applications are expected to grow in 2024, and this growth will be driven by OLED's mobile PC applications, such as laptops and tablets. It is worth mentioning that tablet OLED shipments are expected to increase by 294.0% year-on-year in 2024, mainly due to the launch of the new Apple iPad Pro OLED version. With the growing demand for AI PCs, the demand for high-end laptops is also expected to increase.