Report Expects Display Makers Cut Capacity Due to Tariffs

The latest Large Area Display Production Strategy Tracker report from Omdia reveals that display panel manufacturers maintained a fab utilisation rate above 80% in 1Q25 but are expected to decrease utilisation in 2Q25. As the pull-in demand for 1Q25 tapers off at the start of 2Q25, a more cautious approach to panel purchases is being embraced.

Panel manufacturers are aiming to reduce their capacity utilisation due to uncertainties surrounding the new U.S. tariffs on display application products like TVs, PCs, and smartphones, coupled with decreased panel orders from brands and OEMs. Omdia projects that utilisation will dip below 80% in April 2025 and further decline to 76% in May 2025.

According to the report, since 4Q24, panel makers have been running fabs at high utilisation rates of 81% to 83%, partly fueled by China’s “swap old for new” subsidy program, which has boosted demand for LCD TV panels. Chinese TV manufacturers have increased production and shipments to the U.S. to mitigate tariff risks, thereby driving up demand in early 2025, particularly for 75-inch and larger LCD TV panels.

Concerns about potential new U.S. tariffs commencing in April and uncertainties regarding display panel demand have prompted PC and TV set manufacturers to reduce their panel inventory purchases. Some have already trimmed their panel orders for 2Q25. The Omdia February 2025 outlook predicted an April utilisation of 82% and May at 78%. However, with certain Chinese TFT LCD manufacturers planning extended breaks for the May Labor Day holiday, utilisation could drop further to around 75% in May.

“With demand slowing and uncertainties surrounding the tariff impact, panel makers are shifting from their initial high capacity utilisation mode back to a production-to-order approach,” stated David Hsieh, Senior Director for Display Research in India. “This strategy is expected to help stabilize panel prices amidst weakening demand. However, given that panel prices have remained high over the past six months, TV and PC brands, as well as OEMs, may push for additional price reductions to offset U.S. tariffs.”

Hsieh further commented, “The display market is embarking on a new cycle and is likely to stabilize later in 2025. Tariffs and their influence on display demand will be the primary determining factor in this transition.”