Omdia: Display Makers Cut Capacity Utilization During Uncertainty Over Display Application Tariffs

Rhea-AI Summary

Display panel manufacturers are expected to reduce fab utilization rates in Q2 2025, following high utilization above 80% in Q1 2025. The decline is attributed to uncertainty over new U.S. tariffs on display products and reduced orders from brands and OEMs.

Omdia forecasts utilization to drop below 80% in April 2025 and further to 76% in May 2025. This follows strong Q4 2024 performance with 81-83% utilization, partly driven by China's 'swap old for new' subsidy program boosting LCD TV panel demand.

Chinese TV manufacturers had accelerated U.S. shipments to mitigate tariff risks, particularly for 75-inch and larger LCD TV panels. However, concerns over potential April tariffs have led PC and TV manufacturers to reduce panel inventory purchases for Q2 2025. Some Chinese TFT LCD makers plan extended May Labor Day breaks, potentially pushing utilization down to 75%.

Positive

• Strong Q1 2025 fab utilization maintained above 80%
• High demand for 75-inch and larger LCD TV panels in early 2025

Negative

• Expected utilization drop to 76% in May 2025
• Reduced panel orders from brands and OEMs for Q2 2025
• Potential further price pressure from TV and PC manufacturers
• Market uncertainty due to pending U.S. tariffs

LONDON--(BUSINESS WIRE)-- According to the latest report from Omdia’s Large Area Display Production Strategy Tracker, display panel makers maintained a fab utilization above 80% in 1Q25 but are expected to reduce utilization in 2Q25. As the pull-in demand for 1Q25 winds down at the start of 2Q25, set makers are adopting a more conservative approach to panel purchases.

Fab utilization rates (%)

Uncertainty surrounding the new U.S. tariffs on display application products including TVs, PCs and smartphones, combined with reduced panel orders from brands and OEMs, is prompting panel makers to scale back capacity utilization. Omdia predicts utilization will drop below 80% in April 2025 and further to 76% in May 2025.

Since 4Q24, panel makers have operated fabs at high utilization levels of 81%-83% driven in part by China’s “swap old for new” subsidy program which has boosted demand for LCD TV panels. Chinese TV manufacturers have accelerated production and shipments to the U.S. to mitigate tariff risks, pushing demand higher in early 2025, particularly for 75 inches and larger LCD TV panels.

However, concerns over new potential U.S. tariffs starting in April and uncertainties in display panel demand have led to PC and TV set makers reduce their panel inventory purchases. Some have already reduced their panel orders for 2Q25. In Omdia’s February 2025 outlook, April utilization was expected to be 82% and May at 78%. However, with some China TFT LCD makers planning extended breaks for the May Labor Day holiday utilization could fall further to around 75% in May.

“With demand slowing and uncertainty around tariff impact, panel makers are shifting from their original high capacity utilization mode back to the production-to-order mode,” said David Hsieh, Senior Director for Display research in Omdia. “This strategy should help stabilize panel prices amid weakening demand. . However, since panel prices have remained elevated over the past six months, TV and PC brands and OEMs may push for further price reductions to offset U.S. tariffs.

Hsieh added, “The display market is entering into a new cycle and will likely stabilize later in 2025. Tariffs and their impact on display demand will be the biggest swing factor in this transition.”

ABOUT OMDIA

Omdia, part of Informa TechTarget, Inc. (Nasdaq: TTGT), is a technology research and advisory group. Our deep knowledge of tech markets combined with our actionable insights empower organizations to make smart growth decisions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250402228909/en/

Fasiha Khan: fasiha.khan@omdia.com

Source: OMDIA

FAQ

What are the projected display panel utilization rates for Q2 2025?

Utilization rates are expected to drop below 80% in April 2025 and decline further to 76% in May 2025, with potential drops to 75% due to extended Labor Day breaks.

How have U.S. tariff concerns impacted display panel production?

Uncertainty over new U.S. tariffs has led manufacturers to reduce capacity utilization and shift to production-to-order mode, while Chinese manufacturers accelerated shipments to mitigate risks.

What factors drove high display panel utilization in Q4 2024?

Panel makers maintained 81-83% utilization rates, primarily driven by China's 'swap old for new' subsidy program which boosted LCD TV panel demand.

How are TV and PC manufacturers responding to potential U.S. tariffs?

They are reducing panel inventory purchases for Q2 2025 and may push for price reductions to offset potential U.S. tariffs on display application products.