According to a research report, short-term factors such as event-driven stockpiling are improving panel supply-demand dynamics. TV panel prices rose across the board in the first quarter of 2026, with increases expected to continue into April 2026. Panel makers' performance is trending upward sequentially. In the long run, the value logic of the panel industry under healthy competition remains solid. Industry profit growth is projected to shift from being primarily driven by price hikes to greater value creation. Key drivers include larger screen sizes pushing the supply-demand equilibrium upward, thereby supporting stable price increases; continued cost reduction through localization and premium product upgrades; peaking and eventual decline in depreciation expenses; and the repurchase of minority interests. Leading manufacturers are expected to see accelerated profit growth.
Regarding the current industry phase, global LCD production is now concentrated in mainland China, with domestic firms holding dominant market power. Supply-side dynamics continue to strengthen, and no new high-generation LCD production lines are planned. Depreciation expenses are expected to peak and then decline, supporting a stable-to-rising supply-demand balance. The industry has transitioned from a highly cyclical phase to a stable growth phase characterized by healthy competition. Profits are likely to accelerate, and valuation methods may shift from price-to-book (PB) to price-to-earnings (PE) or cash flow-based metrics.
In the near term, TV panel prices have risen since early 2026, improving panel makers' quarterly performance. Price increases have been the main driver of profitability improvement in LCD TV over the past three years. From the 2022 low to the fourth quarter of 2025, TV panel prices increased by 35% to 58%, with leading LCD-focused manufacturers seeing quarterly display business net profit improve by over 5 billion yuan. During peak seasons in the second and third quarters of 2025, net profit margins for LCD TV at top manufacturers reached over 15%. In the first half of 2026, demand for TV panels is strong due to events like the Winter Olympics and the World Cup. With lower storage cost proportions, the impact of rising memory prices is limited. As panel price increases continue into the second quarter of 2026, major panel makers are expected to report sequentially better earnings.
Long-term opportunities lie in the shift from price-driven profit growth to value creation, with rapid growth prospects remaining clear. As the industry moves from a profit recovery phase to healthy growth, panel prices will remain a key indicator and sentiment driver, though the pace and extent of increases may slow compared to the past three years. Future profit expansion will rely more on industrial value creation, focusing on three areas: First, an upward shift in the supply-demand balance will support steady price increases, while localization, process cost reductions, and product upgrades will drive profit growth. The industry is expected to reach a tight balance by 2028, underpinning stable price trends. Through technology upgrades, material localization, and premium product penetration, cash gross margins for panel makers are likely to see low single-digit improvements. Second, capital expenditures are expected to remain low, and depreciation expenses peaking will accelerate profit growth. Limited new investments in LCD and Gen 6 OLED, along with manageable Gen 8 OLED spending, should keep overall capex subdued. Depreciation is projected to peak around 2025, after which profits will enter a faster growth phase. By 2030, depreciation from original investments at leading firms is estimated to decline compared to 2025, contributing significantly to profit acceleration. Third, the repurchase of minority interests is expected to further boost net profit attributable to parent companies. With strong profitability and reduced capex, panel makers are likely to maintain robust cash flows, enabling them to use internal funds to buy back minority stakes, thereby increasing net profit and earnings per share.
Key risks include international macroeconomic and geopolitical volatility, weaker downstream demand, potential panel price declines, intense industry competition, and technological disruption.
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