Display Makers Cut Capacity Amid Tariff Uncertainty

The global display market is in the throes of a significant shift, as panel makers grapple with the uncertainty surrounding new U.S. tariffs on display application products. According to Omdia’s Large Area Display Production Strategy Tracker, display panel manufacturers have maintained fab utilization rates above 80% in the first quarter of 2025, but are now expected to reduce these rates in the second quarter. This strategic move is a direct response to the pull-in demand for the first quarter winding down and the conservative approach adopted by set makers in their panel purchases.

The uncertainty surrounding new U.S. tariffs on display application products, including TVs, PCs, and smartphones, has prompted panel makers to scale back capacity utilization. Omdia predicts that utilization will drop below 80% in April 2025 and further to 76% in May 2025. This follows a period of high utilization levels of 81-83% in the fourth quarter of 2024, driven in part by China’s “swap old for new” subsidy program, which boosted demand for LCD TV panels. Chinese TV manufacturers accelerated production and shipments to the U.S. to mitigate tariff risks, pushing demand higher in early 2025, particularly for 75 inches and larger LCD TV panels.

However, concerns over new potential U.S. tariffs starting in April and uncertainties in display panel demand have led PC and TV set makers to reduce their panel inventory purchases. Some have already reduced their panel orders for the second quarter of 2025. In Omdia’s February 2025 outlook, April utilization was expected to be 82% and May at 78%. However, with some China TFT LCD makers planning extended breaks for the May Labor Day holiday, utilization could fall further to around 75% in May.

David Hsieh, Senior Director for Display research in Omdia, noted that "with demand slowing and uncertainty around tariff impact, panel makers are shifting from their original high capacity utilization mode back to the production-to-order mode." This strategy should help stabilize panel prices amid weakening demand. However, since panel prices have remained elevated over the past six months, TV and PC brands and OEMs may push for further price reductions to offset U.S. tariffs.

The display market is entering into a new cycle and will likely stabilize later in 2025. Tariffs and their impact on display demand will be the biggest swing factor in this transition. The competitive landscape among panel makers and brands is also likely to be affected. Panel makers are shifting from a high capacity utilization mode to a production-to-order mode, which should help stabilize panel prices amid weakening demand. However, this strategy may also lead to increased competition among panel makers as they vie for orders in a more uncertain market. Brands and OEMs, on the other hand, may seek to diversify their supply chains to mitigate the risks associated with tariffs, potentially leading to a more fragmented market.



The long-term implications for the global display market are significant. The uncertainty surrounding new U.S. tariffs on display application products is likely to have a profound impact on the market. The tariffs could lead to increased costs for brands and OEMs, who may then push for further price reductions from panel makers to offset these costs. This could lead to a new cycle in the market, with increased competition among panel makers and a more fragmented market as brands and OEMs seek to mitigate tariff risks.

The display market is at an ethical crossroads, where the pursuit of profit must be balanced against the need for stability and sustainability. The tariffs and their impact on display demand will be the biggest swing factor in this transition. The display market is entering into a new cycle and will likely stabilize later in 2025. However, the path to stability will be fraught with challenges, as panel makers and brands navigate the uncertainties of the tariff landscape.

In conclusion, the reduction in fab utilization rates by display panel manufacturers in the second quarter of 2025 is a strategic response to the uncertainty surrounding new U.S. tariffs on display application products. This move has significant implications for the global display market, with potential long-term impacts on the competitive landscape among panel makers and brands. The display market is at an ethical crossroads, where the pursuit of profit must be balanced against the need for stability and sustainability. The tariffs and their impact on display demand will be the biggest swing factor in this transition, and the path to stability will be fraught with challenges.