BOE, TCL CSOT, HKC Raise Prices and Plan Production Cuts Despite Weak LCD Demand

Major Chinese display panel manufacturers have recently taken pricing actions that stand in stark contrast to the prevailing industry perception of weakening demand. BOE, TCL CSOT, and HKC have issued price increase notices to downstream brands, while simultaneously planning to significantly cut production of TV LCD panels during the National Day holiday—breaking the traditional industry practice of "cutting prices to reduce inventory when demand is weak."

Divergent Pricing Timelines

The three companies have adopted different schedules for their price adjustments:

• BOE will implement new pricing from the fourth quarter
• TCL CSOT and HKC began adjusting prices for certain panel products as early as September

According to TrendForce, the average utilization rate of global Gen 5 and above large-generation panel fabs is expected to drop to 79.6% in October, a decline of 4.2 percentage points month-on-month from September—a clear signal of supply contraction.

Cost-Driven Price Hikes

The direct trigger for this round of price increases is the rigid rise in upstream costs:

• Corning announced on September 11 that it will raise global prices for yen-denominated display glass substrates starting in the fourth quarter, with an increase of at least 15%
• HKC confirmed during an investor communication session on the same day that prices for certain upstream materials and components are rising
• TrendForce estimates that total costs for TV panels will increase by 4% to 7% quarter-on-quarter in Q4 2026, indicating that cost pressures can no longer be fully absorbed internally

Structural Shift in Supply

The core logic behind raising prices during a period of weak demand lies in the changing structure of industry supply. Over the past few years, overseas panel manufacturers have gradually exited the LCD TV panel market. Currently, BOE, TCL CSOT, and HKC collectively account for approximately 70% of the global TV LCD panel supply. Industry concentration has increased significantly, giving the leading players greater influence in coordinating supply adjustments.

Coordinated Production Cuts

To make price increases more acceptable to downstream buyers, the three companies have simultaneously implemented precise production reduction plans:

• TCL CSOT: Back-end assembly lines at T1, T6, and T10 fabs will each halt production for 7 days
• BOE: Its 10.5-generation line plans to halt production for 4 to 5 days
• HKC: H1, H2, H4, and H5 fabs will halt production for 7, 5, 5, and 3 days respectively, with front-end production also adjusted accordingly

By proactively reducing capacity utilization, the companies aim to avoid inventory buildup and price competition caused by high output, aligning supply more closely with actual procurement demand.

Uncertain Effectiveness

The effectiveness of this "production cut to support prices" strategy remains to be verified. The panel industry has a high proportion of fixed costs. While production cuts can reduce variable costs such as raw materials, expenses like equipment depreciation and fixed labor costs do not decrease proportionally with output, thereby pushing up unit fixed costs.

Additionally, the three companies are at different stages of depreciation:

• TCL CSOT has passed its depreciation peak as of 2025, with depreciation on some acquired production lines largely completed
• HKC will not reach its depreciation peak until 2026, with a decline expected only in 2027

These differences mean that various production lines have varying cost-bearing capacities under low utilization rates.

Market Verification Ahead

Currently, the price increase notices have not yet been fully reflected in actual transaction prices. The final test of whether this "production cut and price hike" strategy can successfully maintain profit levels with lower output will depend on:

• Terminal transaction prices in the fourth quarter
• Shipment volumes
• The financial performance of the three manufacturers