Omdia: Panel makers in mainland China optimize 8.5/10.5 generation panel production line product portfolio to mitigate the shortage of large TV panels

The Zhitong Finance App learned that Omdia published an article stating that strong demand for 65-inch, 75-inch, and 85-inch LCD TV open cells is prompting mainland Chinese panel manufacturers to readjust their product portfolios of 8.5, 8.6, and 10.5 generation TFT LCD production lines to produce more larger-sized panels.

Large-size LCD TV open cells, particularly those of 65-inch, 75-inch, 85-inch, and 98-inch and above, are experiencing a strong growth trend. According to LCD TV sales data for the Double Eleven Shopping Festival in November 2024, sales of 75-inch LCD TVs and above increased strongly year-on-year. Meanwhile, 55-inch LCD TVs and below showed a year-on-year decline in Double Eleven sales in 2024. Starting at the end of August 2024, the Chinese government began providing “trade-in” subsidies for home appliances. Among them, green energy saving is an important standard, and on the premise that the requirements of level 1 and 2 energy efficiency standards are met, consumers will be subsidized at 15% or 20% of the sales price. This prompted consumers to choose larger LCD TVs because they sell for a higher price and can proportionately get a larger subsidy amount.

According to sales data for Black Friday in North America, LCD TV sales increased 4% year on year in 2024, and the area increased 4% year on year, while sales of larger LCD TVs such as 65-inch, 75-inch, and 85-inch LCD TVs increased by more than 5% year over year. In addition, LCD TV brands and OEMs continue to add 98-inch, 100-inch, 110-inch, and even 116-inch TVs to new product launches in the North American market, and launch them at attractive prices. This shows that in the TV panel market, area growth is significantly stronger than the increase in shipment volume.

In 2025, LCD TV panel manufacturers are not planning to increase shipments, but rather want to increase their shipping area, which means they will focus on shipping more 65-inch and larger panels.

As shown in Table 1, LCD TV panel shipments are expected to drop 2% year on year in 2025. In 2025, LG Display will still be shipping LCD TV panels in the first quarter, and from April 1, Huaxing Optoelectronics will fully take over its LCD production capacity in Guangzhou. Due to dynamic changes and uncertainties in the display industry, the shipping targets of panel manufacturers in mainland China may change, including the following aspects:

BOE and Huaxing Optoelectronics may change their business strategies after Huaxing Optoelectronics acquires LG Display's LCD factory in Guangzhou, China.

Huaxing Optoelectronics may readjust the LCD production line of LG display panels in Guangzhou. Will Huaxing Optoelectronics become a humble owner of production capacity and compete with BOE for the position of the number one LCD TV panel supplier in 2025? After acquiring LG Display's LCD production capacity in Guangzhou, China, Huaxing Optoelectronics claims that its target for LCD TV panels in 2025 is only 56.5 million units, which means it will not operate LG Display's old LCD production capacity at full capacity, and part of the production capacity may shift to more oversized TV panel production.

Table 1: LCD TV panel shipments (million units), 2025 (forecast)

Source: Omdia

Since the fourth quarter of 2024, 65-inch, 75-inch, and 85-inch/86-inch LCD TV open cells have experienced supply shortages due to panel makers' limited production capacity (especially 10.5 generation capacity). On the other hand, the supply of oversized polarizers and sub-films (such as PET) did not meet the strong demand for 65-inch LCD TV panels and above, leading to shortages. LCD TV panel manufacturers in mainland China are using 10.5 generation production lines to produce 65-inch and 75-inch panels, while manufacturers in Taiwan Province of China use 7.5-generation and 8.5-generation production lines to produce 75-inch panels. At the same time, due to the inefficiency of the 10.5 generation line when producing 85-inch panels and above, most manufacturers use their 8.5-generation and 8.6-generation lines to produce 85-inch, 86-inch, and 98-inch panels and above.

According to Omdia's “Display Panel Long-Term Demand Forecast and Tracking Report - Third Quarter 2024”, shipments of 85-inch and above LCD and OLED TVs and public displays are expected to increase by 34% in 2025, while shipments of 100-inch LCD TVs and above will exceed 1 million units for the first time.

Due to strong demand for large LCD TV panels, panel makers are making some adjustments to their product portfolios for 8.5 generation, 8.6 generation, and 10.5 generation production lines. These changes are as follows:

Expanding the production capacity of the existing 10.5 generation TFT production line

Currently, the main products of the 10.5 generation TFT LCD production line are 43 inch, 65 inch and 75 inch panels. Because these sizes are produced on the 10.5 generation line, they have better economical glass utilization efficiency.

In 2023, about 56% of 65-inch and 91% of 75-inch LCD TV panels were produced on 10.5 generation TFT LCD production lines. Shipments of 65-inch and 75-inch panels are expected to continue to grow in the next few years due to the decline in the average selling price of the whole machine (ASP) and the development of larger sizes. Total shipments of 65-inch and 75-inch LCD TV panels are expected to reach 60 million units in 2026. If all of these 65-inch/75-inch LCD TV displays are produced on the 10.5 generation line, then the current 10.5 generation production line will have insufficient production capacity. Moreover, not all 10.5 generation production lines can always operate at 90% utilization rate and 90% yield - due to relatively weak equipment, process, etc., some 10.5 production lines can only operate at an operating rate of about 80% and a yield of about 70-80%.

Currently, many 65-inch panels are not produced on the 10.5 generation line, but on the 6, 7, 8.5, and 8.6 generation lines. Most 75-inch panels are produced on the 10.5-generation line, but since Huike does not currently have 10.5-generation production capacity, it is increasing the capacity allocation on its 8.6-generation production line to produce 75-inch panels. 65-inch and 75-inch panels are cut directly on the 10.5 generation line, which has high yield and is economical; however, they are usually not directly cut on lower generation production lines, but instead use the same glass substrate overcut (MMG) method. As a result, panel makers will increase production of 65-inch/75-inch panels on their 10.5-generation production lines, particularly when most 10.5 generation plants will depreciate within the next two to three years. As a result, after 2026, the LCD TV industry is likely to face insufficient 10.5 generation production capacity, and panel manufacturers will hesitate to build a new 10.5 generation production line due to the negative impact of huge capital investment and extremely high depreciation costs on return on investment (ROI).

A smarter approach would be to not meet 100% of the demand for 65-inch panels and above after 2026, and instead let the panel shortage drive panel prices up, thereby providing panel manufacturers with significant profits and ROI.

Therefore, instead of building a new 10.5 generation production line to meet demand, BOE and Huaxing Optoelectronics are strategically expanding their existing 10.5 generation TFT LCD production capacity.

Panel makers will not consider building new TFT LCD production lines for the next few years due to ROI concerns and intense pressure to depreciate new facilities. However, BOE and Huaxing Optoelectronics will continue to expand their current 10.5 generation production capacity by increasing the remaining space for more equipment in these production lines or improving throughput management by reducing flow time in factory processes, thereby maximizing glass substrate delivery capacity.

In 2023, BOE's 10.5 generation production capacity will be 340,000 substrates per month, including B9 and B17 production lines. In 2024, BOE will expand it to 350,000 substrates per month. BOE plans to expand it to 380,000 subboards per month over the next few quarters.

In 2023, Huaxing Optoelectronics's 10.5 generation production capacity is 236,000 substrates per month, including T6 and T7 production lines.

In 2024, Huaxing Optoelectronics will expand it to 250,000 substrates per month. In 2025, Huaxing Optoelectronics will further expand to 265,000 substrates per month. It will reach 270,000 substrates per month in 2026, and eventually reach 300,000 substrates per month in 2027.

SIO's 10.5 production line has no plans to expand; it will maintain its current monthly production capacity of 150,000 substrates while planning a major maintenance in the second quarter of 2025 to improve yield and utilization.

The 8.5 and 8.6 generation lines produce more LCD TV panels, including 85-inch panels and above

Considering the profitability of TV panels and the deficit in display panels, panel makers in Taiwan Province of China are reducing LCD panel production on their 8.5-generation production line and shifting more production capacity to LCD TV panel production, including large sizes such as 85 inches.

BOE has been overcutting 40-inch TV panels and 23.6-inch display panels on its Fuqing 8.5-generation TFT-LCD production line. However, this 23.6 inch display panel by-product is not easily accepted by display panel and TV panel consumers. As a result, BOE decided to use a new MMG overcut method on its Fuqing B10 8.5 generation production line. The new MMG cutter will include eight 40-inch TV panels and two 43-inch TV panels. BOE initially produced 10 43-inch TV panels using a double exposure process (known as “double headed dragon” in Chinese) on its B10 production line. Therefore, in order to reduce the impact of 23.6 inch by-products and achieve the production of 40 inch panels, BOE changed its 40 inch+23.6 inch MMG overcut to a 40 inch+43 inch MMG overcut method. Once BOE starts using 40-inch+43-inch MMG cutters in the first quarter of 2025, it will gradually phase out production of 40-inch+23.6 inch MMG cutters in 2025.

Figure 1: BOE (BOE) uses a new TV panel MMG socket to replace the TV+ display panel MMG socket

Source: Omdia

On the other hand, LCD panel manufacturers in mainland China may also increase the above three overcut production methods to increase the production volume of 43-inch and 85-inch panels. Production of 43-inch panels will shift from the 10.5 generation to the 8.5 and 8.6 generations, while production of the 85-inch panel will increase the supply of oversized sizes.

Source: Omdia

In addition, in addition to producing 85-inch panels, LCD panel manufacturers in mainland China will also produce more oversized panels on their 8.5 and 8.6 generation production lines, including:

Huaxing Optoelectronics: 98 inches, 8.5 generation, 95% glass efficiency

Huike display: 100 inch, 8.6 generation, 93% glass efficiency

Huico Display: 40” +75” MMG, 8.6 generation, 72% glass efficiency

Huike Display: 116-inch+32-inch MMG, 8.6th generation, 91% glass efficiency

BOE: 100 inch+55 inch MMG, 10.5 generation, 72% glass efficiency

Huaxing Optoelectronics: 115 inches, 10.5 generation, 74% glass efficiency

Figure 3: LCD panel manufacturers in mainland China will use 8.5 generation and 10.5 generation line factories to produce oversized TV panels

Source: Omdia

Product portfolio transformation for 10.5 generation and 8.5/8.6 generation production lines

The 10.5 generation production line focuses on the production of 65-inch and 75-inch panels, and there are obvious capacity bottlenecks, while panel manufacturers are shifting more and more production of 32-inch, 43-inch, 55-inch, and even 65-inch panels from 10.5 generation production lines to 8.5 generation and 8.6 generation lines.

Meanwhile, the 8.5 and 8.6 generation lines are focused on producing many MMGs with 85 inch and 86 inch panels. Omdia has observed that LCD panel manufacturers in mainland China have significantly adjusted their product portfolios, particularly BOE and Huaxing Optoelectronics, as shown in Table 2.

Table 2: Possible product portfolio changes between BOE and Huaxing Optoelectronics, 8.5 generation to 10.5 generation

Source: Omdia