The overall utilisation rate of display panel fabrication (fab) plants is expected to remain high in the third quarter of 2017, recording similar levels for the fifth consecutive quarter, according to IHS Markit.
According to the latest Display Production & Inventory Tracker by IHS Markit, the overall fab utilisation rate is expected to reach 91% in the third quarter, up 1,8 percentage points from the previous quarter and up 1,1 percentage points from the same period last year.
“One of the main contributing factors for higher utilization rates in the past few quarters is that display panel makers are making sure their inventories are optimized at healthy levels,” says Alex Kang, senior analyst at IHS Markit.
Production of large LCD panels, which take the majority of overall display production in terms of area, is expected to be 2,25 higher than actual shipments in the third quarter.
This is a result of display makers wanting to build contingency, or wriggle room, in their utilization plans as part of their strategy to offset any unexpected lower utilisation rates, which could trigger off higher costs.
“As a result, panel makers’ inventory will increase, but it will still remain within healthy ranges,” Kang says.
According to IHS Markit, panel makers are expected to keep high utilisation rate throughout the second half of 2017. As production capacity increase has slowed down and panel makers are expected to keep managing inventory levels within healthy limits, they will still have some room to stock up from production surplus volumes.