Group 1 - Morgan Stanley's report indicates that TV brands have resumed normal procurement in response to year-end promotional activities in China and Europe, leading to a shift from a decrease to an increase in panel shipments for Q3, benefiting Taiwanese manufacturers AUO and Innolux [1] - The report highlights that September panel prices remained stable, with mainstream TV panel prices for sizes 32, 43, 55, 65, and 75 inches showing signs of bottoming out [1] - Q3 panel shipments are expected to increase by a low single-digit percentage, contrasting with a 9% decline in Q2 due to tariff uncertainties, which is anticipated to enhance panel manufacturers' bargaining power and alleviate price pressures [1] Group 2 - The stabilization of TV panel prices is expected to positively influence market sentiment towards panel stocks, particularly benefiting Taiwanese firms AUO and Innolux, with an estimated 2% quarter-over-quarter decrease in TV panel prices for Q3 [2] - IT panel prices are also expected to remain stable in September, with both monitor and notebook panel prices aligning with expectations, indicating a stable outlook for IT panel prices in the coming quarters [2] - Despite the positive sentiment from increased Q3 shipments and stabilized TV panel prices, the industry remains cautious, maintaining a "neutral" rating for AUO and Innolux while awaiting clearer signals for a price rebound [2]

Core Viewpoint - The recent report from Morgan Stanley indicates that while TV panel prices have stabilized, the average price for the third quarter is still expected to decrease by approximately 2% compared to the previous quarter, reflecting limited recovery in pricing momentum for companies like AUO and Innolux [1][2] Group 1: Price Trends - In August, the prices for TV, monitor, and laptop panels remained flat month-over-month, which is better than the previously expected decline of 0.3% [1] - The mainstream sizes of TV panels, including 32, 43, 55, 65, and 75 inches, all maintained stable pricing throughout August [1] - Despite the stabilization, the timing for a price rebound remains unclear, which is crucial for the industry's trajectory [1][2] Group 2: Demand and Supply Dynamics - TV brands have resumed normal procurement starting in August to prepare for promotional demands in China, the U.S., and Europe by year-end [1] - The previous overstock situation is gradually being resolved, and ongoing trade negotiations are stabilizing tariff issues, which helps restore market confidence [1] Group 3: Shipment and Capacity Utilization Outlook - The third quarter is expected to see a low single-digit percentage increase in TV panel shipments, improving from a 9% decline in the second quarter [1] - According to Morgan Stanley's survey, manufacturers' capacity utilization is projected to slightly increase from 75%-80% in the second quarter to 80%-85% in the third quarter, indicating a gradual recovery in shipment momentum [1] Group 4: Future Expectations - Morgan Stanley anticipates that TV panel prices will remain generally flat in the near term, benefiting from a rebound in order momentum, which could enhance the bargaining power of panel manufacturers [2] - The prices for information panels, including monitors and laptop panels, are expected to remain stable in the coming quarters, with the third quarter projected to show flat pricing [2] - Although AUO and Innolux have been diversifying into automotive subsystems and industrial displays, standard panels still constitute the majority of their revenue [2]

Group 1: Display Panel Market Overview - In August, the global display panel market continued to experience weak supply and demand dynamics, with panel prices remaining stable [1] - Domestic market support from the third batch of national subsidies for display categories was limited, and consumer demand significantly weakened [1] - In North America, major brands shifted their procurement strategies from "policy-driven" to "cost and inventory constraints," leading to more conservative demand release [1] Group 2: Monitor Panel Market Insights - The supply side saw an increase in the operating rate of high-generation panel factories in Q3, but TV panel demand and growth in small-size applications continued to exert structural pressure on monitor capacity [1] - Overall monitor capacity contracted month-on-month due to ongoing reductions in LCD capacity from overseas manufacturers [1] - Monitor panel prices for mainstream specifications are expected to remain stable in August, with slight adjustments for some specifications [1] Group 3: Notebook Panel Market Dynamics - The global notebook panel market in August showed a continuation of demand differentiation and supply adjustments [2] - The stability of U.S. tariff policies provided certainty for the market, while the "back-to-school" season and preparations for "Black Friday" in Europe and the U.S. slightly boosted overall market demand [2] - However, rising costs in the manufacturing segment and increased prices for core CPU components significantly pressured brand profitability, leading to tighter procurement strategies among brands [2] Group 4: Price Performance of Specific Panel Sizes - For monitor panels, prices for 21.5" FHD, 23.8" FHD, and 27" FHD Open Cell & LCM remained flat in August compared to July [3] - In the notebook segment, the mainstream TN LCM price for low-end HD remained stable, while prices for IPS FHD & FHD+ products saw slight declines of $0.1 and $0.2 for different specifications [2][3]

Investment Rating - The report does not explicitly provide an investment rating for the non-automotive large-size LCD industry Core Insights - The non-automotive large-size LCD industry primarily involves the processing and manufacturing of LCDs 7 inches and above, adopting a sales-based production model with cyclical characteristics. The competition between LCD and OLED technologies is stabilizing, with LCD maintaining competitiveness in the mid-to-low-end market. In 2021, multiple replacement cycles and the surge in remote work and online education drove LCD shipments and prices to historical highs. However, the maturity of panel technology limits the price increase capability of LCDs, leading to a market entering a mature phase where shipment volume is more cyclical than growth-oriented, primarily influenced by replacement cycles and population size, with average prices expected to stabilize in line with global CPI fluctuations [4][40][43]. Industry Definition - LCDs are flat-panel display devices widely used in various electronic devices with medium to large screens. The core working principle is based on the properties of liquid crystal molecules, which control the polarization direction and light transmission by adjusting the electric field intensity. This technology allows LCDs to provide clear and stable visual effects while maintaining low energy consumption. The non-automotive large-size LCD industry is a sub-sector focused on the processing and manufacturing of LCDs 7 inches and above [5]. Industry Characteristics - The non-automotive large-size LCD industry exhibits strong cyclical characteristics, primarily driven by consumer electronics with a typical replacement cycle of 3-5 years. The demand for these products is closely linked to economic conditions and consumer price sensitivity, further enhancing the cyclical nature [16][17]. - The industry mainly adopts a sales-based production model, supported by the mature technology of LCDs, which has a short stocking cycle and low industry entry barriers, making supply unlikely to restrict industry development [18]. - The competition between LCD and OLED technologies is stabilizing, with LCD maintaining strong competitiveness in the mid-to-low-end market despite OLED's advantages in high-end applications [19]. Industry Chain Analysis - The upstream of the LCD industry chain includes liquid crystal materials, glass substrates, polarizers, and chemical materials, providing qualified components and materials to the midstream. The midstream consists of LCD panel manufacturers responsible for producing non-automotive large-size LCDs, while the downstream includes manufacturers of LCD televisions, laptops, tablets, and monitors, which are responsible for consuming and connecting with end consumers [23]. - The report highlights that the bargaining power of upstream companies varies, with a general trend of squeezing midstream companies. For instance, the leading polarizer company Nitto Denko achieved a net profit margin of 13.54%, while Chinese polarizer companies had significantly lower margins [24][30]. Market Size and Trends - The non-automotive large-size LCD market size fluctuated from $51.56 billion in 2020 to $41.35 billion in 2024, with expectations of gradual recovery to $47.79 billion from 2025 to 2030 [40]. - The report attributes the historical changes in market size to multiple replacement cycles and the surge in demand for computers due to remote work and online education in 2021, which drove LCD shipments to historical highs [41][42]. Competitive Landscape - The competitive landscape of the non-automotive large-size LCD industry is characterized by high intensity, with major players including BOE Technology Group, TCL Technology, Sharp, and Panasonic in the first tier. The second tier includes companies like Rainbow Optoelectronics and Xiaomi, while smaller companies occupy the third tier [50][51]. - The report indicates that the profitability of mid-sized enterprises is relatively limited, leading to a risk of elimination in a highly competitive environment. The overall investment return rate in the industry is low, discouraging new entrants and contributing to increased industry concentration [53][54].

Group 1 - The core viewpoint indicates that despite ongoing weak demand, supply-side adjustments are maintaining a weak balance in the market, supporting a stabilization in panel prices in the short term. However, mid-to-high-end panel prices are facing slight downward pressure due to the transmission effect of TV prices [1] - In August, the global display panel market continued to experience weak demand, with prices showing a trend of stability with slight adjustments. The domestic market's third batch of national subsidies has limited impact, and brand procurement demand is decreasing [1] - The supply side is undergoing structural adjustments, with overseas manufacturers reducing LCD production capacity, while demand for TV panels is recovering moderately, further squeezing the capacity for display panels [1] Group 2 - For monitor panels, prices for 21.5" FHD, 23.8" FHD, and 27" FHD Open Cell & LCM panels are expected to remain stable in August [2] - In the notebook panel market, August is characterized by differentiated demand and supply adjustments. The back-to-school season and upcoming Black Friday are expected to slightly boost demand, although some brands are tightening procurement strategies [3] - Price predictions for notebook panels in August indicate that low-end HD TN panel prices are expected to remain stable, while mid-to-high-end specifications are showing a mixed trend [3]

Group 1 - Morgan Stanley indicates that the TV panel shipment volume is slowing down and panel prices are declining, leading to a lack of clear upward catalysts for related company stock prices in the short term [1][2] - The average price of TV panels is expected to drop by 2% by July 2025, with specific monthly declines for various sizes: 3% for 32-inch, 2% for 43-inch, 2% for 55-inch, 2% for 65-inch, and 1% for 75-inch panels [1] - The weakening of previous demand and the fading effect of China's old-for-new subsidy are expected to result in lower TV panel shipments starting from Q2 2025, with Q3 also anticipated to be below seasonal levels [1] Group 2 - Morgan Stanley maintains a "neutral" rating for Innolux and AU Optronics, noting that despite their diversification efforts into automotive subsystems and industrial/commercial displays, their main revenue still relies on standard panel business [2] - Korean TV brands are planning to actively promote OLED TV models to compete with Chinese brands in the high-end market, with sales targets for 2025 set at 5 to 6 million units, up from 4.6 million in 2024 [2] - Although overall shipment volumes remain relatively limited, this trend is seen as positive for Korean panel manufacturers [3]