New Coronavirus Also Hits Global LCD and Semiconductor Industries

Huoshenshan Hospital, rapidly constructed in Wuhan City, Hubei Province, China, the outbreak site of the novel coronavirus infection, to urgently accommodate patients.
[Image source=Yonhap News]

[Asia Economy Reporter Changhwan Lee] The novel coronavirus infection (Wuhan pneumonia), which is spreading worldwide, is expected to impact the ecosystem of major electronic industries such as LCD and semiconductors globally.

According to global market research firm IHS Markit on the 3rd, among various electronic industries, the LCD industry is expected to suffer the greatest damage due to the novel coronavirus. This is because Wuhan, the outbreak site of the virus, is considered a key hub for the global display manufacturing industry.

China is a core production base accounting for 55% of the world's display production capacity. In particular, Wuhan hosts manufacturing plants operated by Chinese display companies such as BOE, the largest display company in China, and Tianma.

IHS Markit forecasted that the overall LCD production capacity in China could decline by more than 20% in February due to the novel coronavirus. The epidemic has caused factory shutdowns and disruptions in workforce and component supply.

As the novel coronavirus spreads not only in Wuhan but also to various regions surrounding Wuhan in China, domestic display companies with manufacturing plants in China, such as LG Display and Samsung Display, are also experiencing some production disruptions.

LG Display has business sites in Guangzhou, Yantai, and Nanjing, with the Yantai module plant currently planning to shut down until the 9th following recommendations from the local Chinese government. Samsung Display is operating all its factories, including Suzhou, normally. However, both companies are keeping all options open, including potential shutdowns, depending on the virus's spread.

There is also a possibility of a sharp rise in LCD TV panel prices due to production disruptions. LCD TV panel prices had been declining for over a year until the end of last year due to oversupply of low-priced Chinese products but rebounded at the beginning of this year. This was because major LCD panel manufacturers reduced production in response to the oversupply and price decline.

In this situation, if supply further decreases due to the impact of the novel coronavirus, LCD TV panel prices could rise even more. LG Display's Chief Financial Officer (CFO) Donghee Seo emphasized the possibility of price increases during the company's earnings conference call on the 31st of last month, stating, "LCD panel supply may decrease due to the novel coronavirus situation in China."

There are also concerns that the novel coronavirus situation could affect not only LCD but also the memory semiconductor industry. According to foreign media, Wuhan is home to Yangtze Memory Technologies Co. (YMTC), China's largest NAND flash memory semiconductor manufacturer, as well as several other Chinese semiconductor companies operating factories.

Our semiconductor companies such as Samsung Electronics and SK Hynix, which have entered China, are currently operating normally but are concerned about potential factory disruptions if the situation worsens. A semiconductor industry official said, "If the situation in China deteriorates further, negative impacts will be inevitable not only for Chinese companies but also for our semiconductor companies."

This content was produced with the assistance of AI translation services.