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Display driver chip supply shortage may extend to 2022

2021-09-14

The report pointed out that in the second half of 2021, the supply of large-size display driver chips is expected to ease compared with the first half. There is still a risk of tension or shortage in 2022. For 12-inch wafers, LCD driver chip supply tends to be balanced or loose. However, the supply of AMOLED driver chips will be more challenging.

Supply and demand outlook of display driver chips for large-size applications

The demand for IT applications continues to be strong, and the penetration rate of high-resolution TV panels continues to increase. Therefore, large-size display driver chips will maintain relatively strong demand throughout 2021. But with the increase in vaccination rates and the opening of more cities, we can observe that market demand in the fourth quarter may begin to decline. And after nearly two years of strong growth, the total demand for large-size display driver chips is expected to drop by 1% year-on-year in 2022.

The demand for large-size display driver chips may begin to decrease in the fourth quarter. At the same time, Nexchip has some new capacity contributions from the third quarter. Therefore, the supply of large-size display driver chips in the second half of 2021 is expected to be relieved to a certain extent. There is still a gap, but it is not as good as The first half of the year was severe. However, since there is no new 8-inch wafer capacity increase, the supply of large-size display driver chips that mainly rely on 8-inch wafer capacity will remain tight until 2022, especially during the peak demand seasons in the third and fourth quarters. The risk of shortage is expected to remain.


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Supply and demand outlook of display driver chips for mobile applications

In the small and medium-sized display driver chip market segment, the demand for smart phone display driver chips accounts for more than 60%. Unlike large-size applications, the mobile terminal market has not grown significantly. However, the tightness and shortage of wafers have made brands cautious about reducing demand, so they will continue to actively purchase in the first quarter of 2021, and there is a phenomenon that the off-season is not short. In the second quarter, everyone’s concerns about inventory and overbooking were increasing, and the price of display driver chips continued to rise, making everyone begin to review demand corrections. Therefore, some brands revised their demand downward. Even so, the demand overdraft may still seriously affect the fourth quarter demand, especially LCD demand. With the continuous increase of Nexchip and SMIC's production capacity, LCD driver chips are expected to exceed demand in the fourth quarter. However, the demand for LCD driver chips is expected to increase slightly in 2022. When demand recovers, the supply of LCD driver chips will tend to be balanced.

On the contrary, AMOLED driver chips will face more challenges. Although the fab has expanded new production capacity to supply AMOLED driver chips, the SAMSUNG Austin factory affected by the snowstorm in the first quarter of 2021 will also resume in the second half of the year, but the demand for AMOLED driver chips has grown faster than the capacity growth rate. Therefore, the shortage of AMOLED driver chips will continue to exist in the second half of 2021. In 2022, due to the off-season in the first and second quarters, demand is expected to fall, and AMOLED driver chip supply may be able to maintain a balance in the first half of 2022. But with the arrival of the peak seasons in the third and fourth quarters, AMOLED driver chip supply will face a shortage. Although many fabs are currently expanding new 12-inch wafer capacity to supply AMOLED driver chips, such as UMC P6 capacity expansion, it takes about two years to build a fab, and the new capacity is expected to be in the second half of 2023. In order to start contributing production capacity. Therefore, prior to this, the supply of AMOLED driver chips with rapid growth in demand will continue to face challenges.


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