According to research by TrendForce, the terminal demand has been weak since this year, which has led to a continuous increase in inventory pressure. In order to effectively control inventory, the driving force for IC shipments has also tended to be conservative, especially peripheral ICs that are in short supply in 2021, such as driver IC, Tcon, The demand for PMICs for panels, etc., quickly reversed downwards, so that panel manufacturers demanded a larger drop in the price of panel driver ICs in the third quarter. Under the condition of supply and demand imbalance and high inventory, it is expected that the price drop of driver IC will expand to 8~10% in the third quarter, and it is not ruled out that it will fall all the way to the end of the year.

TrendForce further stated that domestic panel driver IC suppliers are more willing to cooperate with the requirements of panel manufacturers in order to consolidate the supply momentum, and the price reduction can reach 10~15%. As demand is difficult to improve in a short period of time, it is not ruled out that the price of panel driver ICs will continue to decline, and it is very likely that it will return to the starting point of 2019 earlier than expected.

Despite the sluggish demand in the end market and the increasing inventory of panel makers and panel driver ICs, for foundries, with a diversified product portfolio, even if the demand for panel driver ICs has been revised down in the past, various foundries still have Adjust the product mix accordingly, utilize the vacated production capacity in multiple ways, and effectively allocate and maintain the utilization rate.

Driven by the shortage of chips in the past two years, the foundry price has continued to rise in the past few quarters and has remained at a high price level so far. However, now driver IC manufacturers are simultaneously faced with downstream customers' demand for price reductions and upstream price increases, forcing them to Recently, the production plan has been reduced, and the content of the LTA (Long term agreement) supply contract signed with the foundry may also need to be renegotiated. When the panel driver IC production is greatly reduced, the adjustment of other product mixes cannot fill the production capacity. In the case of the gap, it will likely affect the overall utilization rate of the fab in the second half of 2022.

In summary, TrendForce believes that for fabs, panel driver ICs are less profitable than other applications, but they are one of the most efficient products for fabs to fill capacity. After the driver IC will face a sharp drop in price in the third quarter and reduce the production plan, it is necessary to observe whether the foundry price will be the same as that in the second quarter, or moderately reduce the price to maintain a high utilization rate.