Rising Storage Costs Hit Display Panel Demand: TCL CSOT Outlook

Demand for display panels is currently experiencing a contraction, driven by declining shipments of consumer electronics – including smartphones, PCs, and televisions – as the cost of storage continues to rise. This downturn is occurring despite an accelerated pace of product innovation fueled by advancements in artificial intelligence, highlighting a complex interplay of market forces. The situation underscores the sensitivity of the consumer electronics market to component pricing, particularly memory.

The Storage-Panel Price Convergence

Zhao Jun, senior vice president of TCL Technology Group and CEO of TCL China Star Optoelectronics Technology (TCL CSOT), explained the core issue: “Rising storage prices have dealt a considerable blow to the entire consumer electronics sector.” Specifically, the price of dynamic random-access memory (DRAM) has approached the cost of smartphone display panels themselves, according to a recent report by tech research firm Omdia. Yicai Global reports this price pressure is prompting handset manufacturers to revise their procurement plans downward.

This reduction in procurement is expected to impact shipments of active-matrix organic light-emitting diode (AMOLED) displays for smartphones, decreasing from 817 million units in 2025 to an estimated 810 million units this year. AMOLED technology is known for its vibrant colors and high contrast ratios, making it a popular choice for premium smartphone displays. The convergence of storage and display panel costs is therefore directly impacting the availability of these higher-end features in consumer devices.

Impact Across Device Categories

The effect isn’t limited to smartphones. Market research firm TrendForce projects a 5.4% decline in global personal computer shipments this year compared to 2025, which will translate to a 7.9% decrease in display panel deliveries for PCs. While OLED panel shipments are expected to grow, liquid crystal display (LCD) shipments are predicted to fall significantly. LCDs, while more mature and generally less expensive than OLEDs, are still widely used in a broad range of devices.

The overall outlook for the PC and smartphone markets is even more pessimistic than previously anticipated, according to the International Data Corporation (IDC). They project global PC and smartphone shipments will fall by more than 11% and nearly 13% respectively this year, largely due to persistent challenges in the storage supply chain. Yicai Global highlights the severity of these supply constraints.

Offsetting Factors and Future Demand

Despite these headwinds, some factors are expected to mitigate the decline in demand. Zhao Jun anticipates a boost in large TV consumption due to the 2026 Winter Olympic Games and the 2026 FIFA World Cup in North America. Third-party forecasts suggest TV demand will increase by 1-2% this year, with the total TV screen area projected to grow by over 3%. This suggests a potential shift in consumer spending towards larger-screen entertainment experiences.

January saw support for display panel prices from international sporting events and continued consumer electronics subsidy policies. February saw panel prices rise due to production controls implemented during the Chinese New Year holiday, which temporarily tightened supply. The overall price trend for the first quarter will depend on the balance between manufacturers’ production control measures and actual market consumption this month.

TCL CSOT’s Strategic Response

TCL CSOT is actively responding to these market conditions by exploring new overseas investment opportunities, including expanding manufacturing bases and strengthening supply chains. The company’s Indian and Vietnamese factories demonstrated stable production last year, making them attractive locations for further investment. Yicai Global reports that TCL CSOT will also focus on growing its automotive display business in Europe this year.

Automotive Displays: A Growth Area

The automotive sector represents a significant growth opportunity for display panel manufacturers. Modern vehicles are increasingly incorporating larger and more sophisticated displays for infotainment systems, instrument clusters, and advanced driver-assistance systems (ADAS). This trend is driving demand for high-performance, reliable displays that can withstand the harsh conditions of the automotive environment.

Innovation at Mobile World Congress

At this year’s Mobile World Congress in Barcelona, display panel makers showcased new technologies and products designed to meet the evolving demands of AI-powered devices. These innovations focus on optimizing power consumption, extending battery life, and developing low-power technologies. This emphasis on efficiency is crucial for enabling the widespread adoption of AI features in mobile devices.

Looking Ahead: Production Control and Market Capacity

The overall price trend in the display panel market for the first quarter of 2026 will be determined by a delicate balance between manufacturers’ production control strategies and the actual consumption capacity of the market this month. Manufacturers are carefully managing their output to avoid oversupply and maintain price stability. However, the ultimate success of these efforts will depend on whether consumer demand can keep pace with the available supply. Yicai Global provides further details on TCL China Star’s plans to outpace Samsung Display in printed OLED screen production, initially announced for 2024.

The situation highlights the interconnectedness of the technology supply chain and the vulnerability of consumer electronics to fluctuations in component pricing. Continued monitoring of storage prices, production levels, and consumer demand will be crucial for navigating this challenging market environment.