DFZQ has released a research report stating that ongoing production control strategies by panel manufacturers in the electronics industry, combined with inventory buildup demand for events like the World Cup, are expected to prolong the price increases for large-sized panels. Concurrently, the industry's major capital expenditure cycle is nearing its end, with leading manufacturers' future spending set to decline significantly as they focus on profitability enhancement. Although smartphone OLED panels face short-term price pressure, rising penetration rates and narrowing room for price reductions are likely to cushion the impact, leading to a more stabilized industry landscape. The primary views from Orient Securities are outlined below.
Based on AVC data, prices for various sizes of TV panels increased in late January, with some monitor panels also experiencing price hikes. Panel manufacturers continue to enforce production controls, supporting the continuation of price increases for large-sized panels, despite some investor concerns about the difficulty of improving industry supply-demand dynamics. The firm believes that overall TV panel demand remains stable, and with sustained production discipline, the upward price trend for large panels is expected to persist.
From the supply side, the production of medium and large-sized LCD panels is highly concentrated, suggesting a greater alignment on pricing strategies among manufacturers. Furthermore, production cuts during the Chinese New Year holiday at mainland panel factories are anticipated to further reduce supply output. On the demand side, major sporting events such as the 2026 FIFA World Cup are expected to stimulate inventory replenishment demand. TrendForce projects a slight 0.6% year-on-year decline in global TV shipments for the full year 2026, indicating relatively stable overall shipment volumes. Against this backdrop, the trend toward larger panel sizes is likely to continue, supporting steady demand for panels.
Looking ahead, TV panel prices are expected to maintain their upward trajectory, with AVC forecasting further price increases in February. Moreover, the tight supply-demand conditions for TV panels have begun to extend to the monitor panel segment. AVC anticipates that mainstream IPS/OC specifications saw modest price increases in January, with further rises expected in February.
Leading panel manufacturers are projected to significantly reduce their capital expenditures, alleviating investor concerns that substantial investments in new production lines could continue to erode corporate cash flows. The report argues that the peak period of massive capital spending in the panel industry has passed. As the competitive landscape stabilizes, major players are likely to slash their capital outlays considerably.
According to an announcement from BOE, 2025 represents the peak year for the company's capital expenditures. While the Chengdu Gen 8.6 AMOLED production line project will require continued investment in 2026, capital spending is expected to decrease substantially starting in 2027. Similarly, TCL Technology has announced its investment in the t8 production line to capitalize on the accelerating penetration of medium-sized OLED displays, but currently has no major plans for additional new production lines beyond t8.
Going forward, the construction of new production lines within the industry is expected to diminish significantly. Future incremental cash outlays are likely to be directed primarily toward acquiring minority stakes in existing production lines or purchasing equity in other mature facilities, thereby helping to enhance companies' profitability.
Smartphone OLED panel prices are under short-term pressure, but the impact is anticipated to be relatively manageable. Some investors worry that rising memory chip costs could significantly affect smartphone shipments, potentially prompting phone makers to push for further OLED price reductions. However, the report suggests that while near-term price pressure exists, the overall effect should remain contained.
In terms of volume, the penetration rate of OLED panels in smartphones is expected to continue rising, helping to offset declines in overall smartphone shipment volumes. According to Omdia, global shipments of smartphone AMOLED panels are forecast to dip to 810 million units in 2026, a modest decline compared to the 817 million units shipped in 2025. Regarding pricing, following price reductions in 2025, the scope for further AMOLED price cuts in 2026 appears limited.
Amid overall industry headwinds, domestic Chinese OLED panel manufacturers are likely to seek entry into the supply chains of overseas smartphone brands to sustain their profitability. For instance, as reported by OLEDindustry, Samsung Electronics is expected to incorporate OLED panels from TCL CSOT in some of its smartphone models launching this year.
Investment recommendations and targets: With improving supply-demand dynamics, the uptrend in large-sized panel prices is expected to continue. Relevant investment targets include panel manufacturers such as TCL Technology, BOE, Tianma Microelectronics, Caihong, Visionox, and Everdisplay; panel material suppliers like Luzhou, Qingyi, Lighttech, Wog, Sanlipo, and Shenzhen Textile; display driver IC companies including Tiande; and panel module manufacturers such as BOE Varitronix.
Risk warnings include potential shortfalls in downstream demand, slower-than-expected cost reduction progress, and delays in the localization of supply chains.