According to Omdia’s Tracker, the monthly average utilization of panel makers in June and July 2022 is expected to drop to 70% and 69% versus the total designed capacity respectively, which is the lowest level in 10 years. The previous historical low was 77% in February 2020, when oversupply issues dampened the market and just before the pandemic buoyed sales.
Quarterly average utilization in 2Q22 is expected to be record low as well, at 77%, and is projected to fall even further in 3Q22, to 73%.
Alex Kang, Principal Analyst, Omdia said: “The drop in utilization directly leads to higher fixed costs and ultimately results in elevated production costs and profit deterioration, which is why manufacturers try to avoid it at all costs. The fact that panel makers have chosen to reduce utilization despite a drop in production and profitability implies that the current price plunge is excessively steep and that panel makers are attempting to stop profitability from further deteriorating.”
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