“The hot year-end shopping season is approaching, and panel makers expect demand to start recovering. Those expectations are reflected in their increased utilization rate in the third quarter,” Kang said. “Thanks to production controls, panel makers were able maintain their average inventory days in a normal range by the end of the second quarter of 2019.”
While suppliers are planning to raise utilization rates slightly in the third quarter, levels still are expected to remain below last year’s totals. At 84 percent, utilization in the third quarter of 2019 will be well below 88 percent and 90 percent in the third quarters of 2018 and 2017 respectively.
“This means that the third quarter could have better market conditions than first half of this year—but the entire year of 2019 could be worse than the past couple of years," Kang notes.
According to IHS Markit, panel makers are expected to maintain conservative fab utilization rates throughout the second half of 2019 because the oversupply situation is not resolved. The low fab utilization outlook will have a negative impact on panel makers’ financial results in the second half of 2019, prompting them to accelerate their fab restructuring efforts.