Suspension of work, layoffs, and factory closures, panel companies: It’s so hard for me!

The most cruel thing about the manufacturing industry is that it is difficult to escape the fate of cycles, especially in the manufacturing technology industry that uses heavy assets and high technology to build competitive barriers. In recent times, panel market practitioners seem to be having a hard time. The continuous decline in panel prices for more than two years has brought the global panel industry into a cold winter.

2012-2024 Global Panel Supply and Demand Evolution Chart

JDI suspended operations indefinitely

On September 17, according to foreign media reports, Apple supplier Japan Display Co., Ltd. recently announced that it will indefinitely extend the shutdown of its LCD Hakusan factory.

This production suspension is not accidental, nor is it the first time JDI has done this.

As early as June this year, JDI announced that it would temporarily close the Hakusan plant in Hakusan City, Ishikawa Prefecture from July to September, and would shut down some production lines at the Maoyuan plant at the end of September. Yoshiyuki Tsukizaki, the president of JDI who just took office in June last year, will resign on September 30.

It is worth noting that the media reported that the shutdown of the Hakusan factory was due to the fact that the order volume of iPhone 11 using LCD panels was lower than expected, and the announcement of the indefinite shutdown was made just after the new iPhone was released. It is undeniable that JDI had at least a glimmer of hope for iPhone 11 sales.

In addition to JDI, other panel manufacturers are also not having a good time. Panel manufacturers such as Samsung Display and LG Display have already laid off employees and stopped production earlier. Panel manufacturers are facing a cold winter.

LG Display  lays off employees

Affected by the decline in the price of 50-inch LCD panels, LGD continued to suffer losses, with a net loss of 369 billion won (about 311 million US dollars) in the second quarter. In order to get out of the predicament, LG announced a voluntary layoff plan for Korean production line employees to reduce its domestic employees. At present, it is not certain how many of the 23,000 Korean production line employees will be affected.

LG Display has replaced its chief executive officer (CEO) after failing to compete with cheap Chinese liquid crystal display (LCD) panels. The move came a day after the company announced layoffs when its chief executive Han Sang-beom resigned after an emergency board meeting. Now, the company has appointed LG Chem president Jeong Ho-young as its new CEO.

This month, Samsung also began taking steps to implement the retirement plan, allowing employees who have worked at the company for more than five years to apply for early retirement.

Huaying shut down

On August 29, Huaying announced that it would lay off a total of 2,100 employees, leaving only about 50 people, and all factories have been shut down. Since the financial crisis broke out last year, the factory once stopped production due to supplier shortages, and then resumed small-scale production. In May last year, it closed a 4.5-generation factory, and concentrated orders on the 6-generation factory. The two layoffs totaled 4,600 people.

In the semiconductor dispute between Japan and South Korea, JDI is in shock and waiting for a transfusion, Samsung is waiting to shut down its production line, LG's production line is transforming to large-screen OLED, Astrophotometer has stopped production, Guangdong HKC is forcing people to take leave, Innolux director Wang Zhichao was dismissed, and except for BOE and TCL, the entire LCD industry's price is below cash cost. This is a true portrayal of the entire panel market.

The "cold winter" of the panel market is mainly reflected in the layoffs and production stoppages caused by LCD overcapacity, and the entire panel market can be more appropriately described as "ice and fire": on the one hand, there is global panel overcapacity, the price of LCD panels continues to fall, and market demand is weak; on the other hand, OLED is "hard to come by."

At present, the panel industry is undergoing a new round of reshuffle. In the cold winter, some companies will fall and some will stand up. The key factors are the foresight of technology and the estimation of market demand, knowing how to be prepared for danger in times of peace and "not putting all your eggs in one basket". Science and technology are the primary productive forces. Whoever does not make progress in scientific research and development will be eliminated by this era, and those who survive must be the companies with the strongest technical strength, competitiveness and adaptability.