- Display panel makers project a 3% drop in fab utilization for Q2 2025 due to weak demand for LCD TV panels.
- Top Chinese manufacturers will cut fab utilization by 6-9 percentage points in May 2025.
- The Chinese government’s “swap old for new” subsidy program temporarily boosted demand in early 2025.
The latest analysis by Omdia indicates that display panel manufacturers are predicting a 3-percentage point decline in fab utilization rates for the second quarter of 2025. This forecasted decrease follows a stable period that commenced in mid-Q4 2024 and is largely attributed to the expected reductions in LCD TV panel orders from major television brands.
Chinese panel producers, including BOE, China Star, and HKC Display, who collectively hold 60% of the global display manufacturing capacity by area, are anticipated to lower their monthly average fab utilization by 6-9 percentage points starting in May. This decline is further influenced by prolonged factory holidays during China's Labor Day period.
Historically, it is uncommon for Q2 fab utilization rates to be lower than those in Q1, as set makers generally ramp up panel purchases to meet end-market demands later in the year. In contrast, the past two years saw higher quarterly fab utilization in Q2 compared to Q1 by 12 and 7 percentage points, respectively.
In 2024, Chinese panel makers took additional holidays around the Lunar New Year to mitigate potential panel price drops, a strategy not employed in 2025. Instead, driven by the Chinese government’s “swap old for new” program, Chinese TV makers increased their demand for LCD TV panels to enhance market share.
March 2025 witnessed a notable surge in LCD TV panel requests from TV manufacturers with operations in Mexico, following a temporary suspension of US import tariffs on Mexican goods, thereby boosting fab utilization rates in Q1 2025. However, the uncertainty regarding end-market demand in the second half of 2025 has prompted panel manufacturers to adopt a more cautious approach, focusing on carefully managing inventory levels and maintaining a 'production-to-order' strategy.
