(Yicai Global) March 13 -- The price of liquid crystal display panels used in smartphones is set to drop slightly this month as both handset sales and panel supply are slow to recover from the novel coronavirus epidemic in China.

The adverse effects of the Covid-19 virus on demand for mobile phone screens will start to be felt this month, Cinno Research, a consultancy specializing in the flat-panel display and semiconductor industries, said in a report published yesterday.

Smartphone sales plunged 62 percent last month from January as bricks-and-mortar retail outlets stayed shut and people hunkered down at home amid the virus, according to Shanghai-based Cinno.

As a result, market prices have started to loosen, it added. The price of an LCD screen is likely to drop by as much as 20 US cents this month from February, while active matrix organic light-emitting diode screens could each cost USD1 less.

Some display makers have delayed reopening for business since the country went into lockdown. Shenzhen China Star Optoelectronics Technology, one of China's main suppliers of low temperature polysilicon LCD panels, which has factories in the disease epicenter of Wuhan, delivered 15 percent fewer screens last month than in January.

But Beijing's BOE Technology, one the world's biggest producers of LCD, OLEDs and flexible display panels, has not dropped production levels. Neither have Taiwan-based screen makers Innolux and AU Optronics. 

Recovery

Mobile phone sales began to return to normal levels after Feb. 17, and vendors and distributors are bound to order more stock in the second quarter, Chen Jun, vice general manager at market research institute Sigmaintell Consulting, told Yicai Global.

Still, it will take some time for panel supply to get back to where it was, he added. Several major upstream suppliers have yet to restore full operations. Also, many core materials come from Japan and South Korea where the epidemic is still not under control.

Planned launches of new fifth-generation mobile phones this year will make it difficult for handset makers to keep prices down, Chen said. Asking LCD panel makers to cut prices will not be easy. If they don't make reductions, however, phone makers may have to resort to downgrading the type of display panel in their new products, he added.

The best-case scenario would be if the epidemic could be fully contained in China by April, Cinno said. This would allow product development schedules to return to normal and the gradually recovery of market demand. If that happens, the price of LCDs should stabilize by June.

But the growing scale of the outbreak overseas is another big uncertainty facing the flat-panel display market and even the global economy, it added.

Editors: Tang Shihua, Kim Taylor