In 2021, notebook panel shipments reached a record high of 282 million units, with an annual growth rate of 25.1%, according to TrendForce’s research. In the first half of the year, demand was driven by the pandemic and primarily focused on consumer notebooks and Chromebooks while, in the second half of the year, as Europe and the United States gradually lifted lockdowns and work returned to normal, demand largely shifted to commercial models, which continued to support the demand for notebook panels throughout the year.
It is worth noting that TrendForce believes shipment totals of notebook panels from 1Q22 to 2Q22 may be corrected. Notebook panel shipments in 1Q22 are estimated at approximately 67.9 million units, a QoQ decline of 9.7% while 2Q22 shipments are expected to drop to 61.4 million units, down 9.5% QoQ. In addition to the impact of the traditional off-season, there are two reasons for this correction. One is that inventory on the brand-side has increased. Due to the shortage of panels in the past two years, the brand-side continued to purchase panels in 2021 to avoid supply chain disruption. Normally, notebook brands hold 4 to 8 weeks of inventory but some brands have already stocked up to 8 weeks. Two, since a whole notebook requires numerous components, it cannot be assembled and shipped if even one is missing. Limitations impose by incomplete materials lists caused the growth rate of notebook computer shipments to fall behind that of panel shipments, shifting notebook computer panels into oversupply.
Despite this, TrendForce has specifically mentioned, since the profit margin of notebook panels still beats LCD monitor panels and TV panels, panel makers will still desire an increase in the supply of notebook panels. However, in the face of a possible correction in notebook panel shipments, panel makers may accumulate more inventory and deepen the downward pressure on notebook panel pricing.
Looking forward to 2022, panel shipment performance and price trends will be adversely affected by adjustments in notebook brand inventories in 1H22. In 2H22, notebook brands will continue to focus on sales plans for whole notebook computers. The sales performance of these brands during the peak season is still worth looking forward to and the restocking momentum of notebook panels is expected to recover. Current estimates put the shipment of notebook panels at 265 million in 2022, a decrease of 6.0% YoY.
Due to the pandemic, laptops shipments reached a record high of 240 million units in 2021, according to TrendForce‘s investigations. However, the market has been abuzz recently and, as the global population of the fully vaccinated has exceeded 50%, relevant demand driven by the pandemic is expected to gradually weaken. Shipment volume will decrease by 3.3% year-on-year, revised down slightly to 238 million units. Chromebooks will account for approximately 12.3% of shipment volume, though it accounted for approximately 15.2% in 2021. The momentum of shipments has slowed down significantly which indicates that demand derived from the economic effect of remote working and teaching has subsided.
TrendForce further states that Chromebook shipments declined sharply by nearly 50% in 2H21 due to the end of the Japanese government’s education tender and an increase in U.S. market share. However, thanks to the sequential return to the office of European and American companies driving a wave of commercial equipment replacement, shipments of commercial laptops have grown rapidly to make up for the shortfall. In turn, the shipment of laptops in 4Q21 hit the highest levels of the year, reaching 64.6 million units. In addition, due to the severe shortage of IC materials in mature processes, the backlog of orders extends to 1Q22 and the off-season is expected to be short. Compared with the average quarterly reduction of 15% in previous years, this year’s pullback is expected to be less than 10%.
It is worth noting that due to the shortage of container ships and issues with port congestion, shipping time has been prolonged, increasing by two to three times from manufacturers in mainland China to the United States compared to before the epidemic. Notebook brands have all been shipping in advance and the proportion of air freight shipments has increased. However, shipping time still exceeds expectations, which may flood the supply chain with duplicate orders from downstream customers, resulting in overstocked inventories and the risk of subsequent orders being canceled. In addition, the wave of commercial equipment replacement driven by a return to the office will be a major variable that will affect the demand for notebooks in 2022, resulting in near-term buzz in the market.
TrendForce indicated that in the past, due to factors such as fewer working days during the Lunar New Year Holiday and labor shortages in mainland China, brands would often require large OEMs to produce and ship before the Lunar New Year. This first quarter end-of-season surge will start from this month. Even though changes in end-user demand is unclear, March will see the beginning of a production surge to end the first quarter. If there is a major change in demand at that time, it may lead to an accumulation of distribution channel inventory, leading to a downward revision in demand, and a return to the normal equipment replacement cycle.
High contrast and brightness Mini LED products have been developing aggressively, according to TrendForce’s investigations. Therefore, several LCD monitor brands have launched high-end LCD monitor products with Mini LED backlighting (Mini LED wafer size is defined as between 75~500µm). In 2021, the price of Mini LED-backlit LCD monitors fell between US$2,300 and US$5,000. For example, a 31.5-inch Mini LED backlit model is priced approximately 4 to 8 times that of model of the same size featuring a traditional LED backlight. This is a product that resides at the top of the pyramid. Due to high pricing and its recent introduction, market scale is relatively limited. Total shipments of LCD monitors equipped with Mini LED backlights is estimated at 51,000 units in 2021.
Looking forward to 2022, QD OLED LCD monitors and OLED LCD monitors will join the ranks of products fighting for a share of the high-end LCD monitor market. Mini LED LCD monitor shipments are forecast to reach 65,000 units at most in 2022, or an annual growth rate of 27%.
This year, Samsung was ranked first in market share in terms of Mini LED equipped LCD monitor brands. Its Mini LED LCD monitor targets e-sports players and emphasizes high cost performance, which Samsung has converted into a 58% market share. Dell focuses on professional creators as its main customer base, so its products are designed to meet highly-demanding specifications. Dell takes second place with a market share of 29%. ASUS also specializes in e-sports and comes in third with approximately 12% of the market.
In addition, in terms of the market share of Mini LED backlit LCD monitors based on size, there are currently only three product sizes on the market, 49-inch, 31.5-inch and 27-inch. Samsung has launched an exclusive 49-inch 32:9 model which accounts for the entirety of Samsung’s 58% market share. Both Dell and ASUS have launched 31.5-inch models that account for a 39% market share. Lastly, 27-inch models account for only a 3% market share.
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Despite their similar physical dimensions, notebook panels and tablet panels entail drastically different market conditions. Being two of the strongest performers in the relatively oligopolistic tablet market, Apple and Samsung collectively possess a nearly 60% market share, thereby forcing other brands to adopt a relatively passive strategy that prioritizes conserving market share over adopting emerging technologies. In contrast, the notebook computer market has remained competitive throughout the years, with market leaders HP, Lenovo, and Dell holding the absolute advantage in the commercial notebook segment. Even so, Acer and Asus still enjoy some degree of dominance in the consumer segment, not to mention the fact that Apple has carved a niche market of its own thanks to the absolute differentiation of MacBooks from the rest of the field.
With greater diversity of brands comes greater competition in the market. As such, companies must now continue to refresh their product specs and product ranges in order to stay competitive. In this regard, Mini LED products would appear to be likelier to see adoption in the notebook computer market than in the tablet market. It should be pointed out that SDC (Samsung Display Co.) holds the sole patent for OLED tablet panels – the main competitor of display solutions featuring Mini LED backlights and LCD panels. Although SDC is still figuring out its medium- and long-term strategies in the tablet market, it has been relatively aggressive in capturing share in the notebook market. For instance, SDC’s OLED notebook panels have been gradually cannibalizing market shares from LCD notebook panels since 2021. To date, more than four million notebook computers featuring Samsung’s OLED panels have been shipped, accounting for a nearly 2% market share. In addition, almost all mainstream notebook brands have started carrying their respective lineup of OLED notebooks.
The meteoric rise of OLED models in the notebook market this year can primarily be attributed to SDC, which is the sole supplier of OLED notebook panels. Whereas SDC previously allocated most of its production capacity for OLED (Rigid OLED) panels to smartphone displays, the successive ramp-up of Gen 6 production lines for OLED (Flexible OLED) panels in China has resulted in a hypercompetitive market with plummeting quotes that both placed significant downward pressure on the existing price band of rigid OLED panels and negatively affected demand for rigid OLED panels. Given that the aforementioned factors are unlikely to reverse course, SDC has therefore decided to reallocate their production capacity for rigid OLED panels from smartphone displays to notebook displays instead, since the former has continued to decline as an added value while the latter appears to have much more potential for growth.
Incidentally, SDC has spent considerable time cultivating its presence in the notebook computer market. The company formerly positioned its OLED solutions exclusively in the flagship market segment, with UHD/4K being the only resolution available on its OLED notebook panels. The adoption of these products was lukewarm at best due to OLED panels’ prohibitive prices and the very limited target audience for UHD models. Moving to 2020, however, SDC adopted a more ambitious approach to the notebook market and subsequently released a host of OLED panels featuring Full HD resolution in accordance with the mainstream market’s demands. By doing so, SDC was able to not only substantially lower its OLED notebook panel quotes, but also align its products with the enormous total addressable market of mainstream notebook consumers, in turn skyrocketing notebook brands’ willingness to adopt OLED panels.
Not only have OLED displays enjoyed a longstanding presence in the high-end smartphone and TV segments, but most consumers also generally understand that OLED panels are superior to traditional LCD panels with respect to such specifications as color saturation, contrast levels, and even physical thickness. For notebook computer brands, adopting OLED panels in their displays allows said brands to cut down on costs that would otherwise have to be spent on either educating the average consumer on popular science topics related to display technology or marketing the brands’ display solutions, as OLED displays’ superior specs are already widely known. That is why almost all mainstream brands, ranging from Asus to HP and Dell, have released OLED-equipped notebook computers, some of which even boast consumer-oriented product positions and consumer-friendly retail prices.
On the other hand, although the integration of Mini LED backlights significantly bolsters LCD panels’ traditionally weak contrast levels, significant marketing costs are required to ensure consumers understand the benefits of this new backlighting technology. While OLED solutions are already widely recognized in the market, Mini LED products’ vast marketing costs represent a significant competitive weakness against OLED products. Furthermore, manufacturing costs of display solutions that feature Mini LED backlights and LCD panel modules are about 30-50% higher than those of equivalent solutions featuring OLED panel modules due to the former’s complex design, high number of components, and limited economy of scale. Hence, high manufacturing costs are yet another obstacle preventing brands from investing in Mini LED development.
（Image credit: PikiWizard）
The new normal ushered in by the pandemic will not only become the driving force of digital transformation but will also continue to drive the server market in 2022, according to TrendForce’s investigations. It is worth noting that potential unmet demand in 2021 and the risk of future server component shortages will become medium and long-term variables that influence the market. Analyzing the shipment volume of completed servers, a growth rate of approximately 4-5% in completed server shipments is expected next year with primary shipment dynamics remaining concentrated in North American data centers with an annual growth rate of approximately 13-14%. From the supply chain perspective, the ODM Direct business model has gradually replaced the business model of the traditional server market, giving cloud service providers the ability to respond quickly to market changes. However, based on the unpredictability of the market, TrendForce assumes two forecasts for server growth trends. One, the supply situation of key components is effectively improved. Two, the supply situation of key components is exacerbated.
TrendForce states, based on the current situation as materials issues ease quarter by quarter, the annual growth rate of server shipments in 2022 will reach 4~5%. There are three primary factors driving market momentum. First, the introduction of the Intel Sapphire Rapids and AMD Genoa platforms into the market may once again stimulate the replacement of enterprise client servers and infrastructure construction in data centers. Second, the market generally believes that transformational needs generated by the pandemic in 2022, such as shifts in working paradigms and the new normal, will continue to drive the cloud market. Furthermore, international tensions have led to geopolitical uncertainty, which in turn has encouraged countries to tighten their control over data sovereignty and prompting the emergence of small-scale data centers in specific geographic locations.
Actual shipment volume of completed servers in 2022 depends on improvement of supply chain issues
Based on the two aforementioned assumptions, if the pandemic is effectively controlled next year, and international logistics, satisfaction of materials demand, and other factors either return to normal or fare better than expected, server companies will be able to increase their shipping capabilities and the annual growth rate of shipments in the overall server market will be able to reach 5-6% while the annual growth rate of ODM-Direct will approach 15%, up from the original forecast 13%. However, if the pandemic intensifies next year, the overall global economy will continue under that dark cloud which will greatly affect the willingness of companies to invest. In that case, the estimated annual growth rate of server shipments will fall to only 3-4%. In addition, the growth momentum of North American data centers will also be affected leading to an annual growth rate of ODM-Direct of only 10%, approximately.
As a whole and continuing under the influence of the two-year pandemic, the business trend of flexible deployment is irreversible. Regardless of overall economic changes, TrendForce expects double-digit growth in the demand for ODM-direct servers next year while overall server demand will also maintain a positive growth trajectory. However, continued attention should be focused on issues related to server order fulfillment in the broader market, including the fulfillment rate of key PMIC and LAN chip materials. At the same time, another major market variable will be whether Intel and AMD can introduce their two new platforms as scheduled next year and inject additional momentum into equipment replacement.
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