Report expects display makers cut capacity due to tariffs
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The latest Large Area Display Production Strategy Tracker report from Omdia indicates that display panel manufacturers sustained a fab utilisation rate above 80% in 1Q25 but are anticipated to lower utilisation in 2Q25. As the pull-in demand for 1Q25 winds down at the beginning of 2Q25, a more cautious approach to panel purchases is being adopted.
Panel manufacturers are looking to scale back their capacity utilisation due to uncertainty surrounding the new U.S. tariffs on display application products such as TVs, PCs, and smartphones, alongside reduced panel orders from brands and OEMs. Omdia forecasts that utilisation will fall below 80% in April 2025 and drop further to 76% in May 2025.
The report shows that since 4Q24, panel makers have operated fabs at high utilisation levels of 81% to 83%, partly driven by China’s “swap old for new” subsidy program, which has increased demand for LCD TV panels. Chinese TV manufacturers have ramped up production and shipments to the U.S. to mitigate tariff risks, thereby pushing demand higher in early 2025, especially for 75-inch and larger LCD TV panels.
Concerns about potential new U.S. tariffs starting in April and uncertainties regarding display panel demand have led PC and TV set makers to lower their panel inventory purchases. Some have already reduced their panel orders for 2Q25. The Omdia February 2025 outlook anticipated an April utilisation of 82% and May at 78%. However, with some Chinese TFT LCD manufacturers planning extended breaks for the May Labor Day holiday, utilisation could decline further to around 75% in May.
“With demand slowing and uncertainty surrounding the impact of tariffs, panel makers are transitioning from their original high capacity utilisation mode back to a production-to-order approach,” said David Hsieh, Senior Director for Display Research in India. “This strategy should help stabilise panel prices amid weakening demand. However, since panel prices have remained elevated over the past six months, TV and PC brands, as well as OEMs, may advocate for further price reductions to counterbalance U.S. tariffs.”
Hsieh added, “The display market is entering into a new cycle and will likely stabilise later in 2025. Tariffs and their impact on display demand will be the biggest swing factor in this transition.”
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