2022 Material Shortage and Forecast

How Materials Shortages are Affecting the LCD Industry in May 2022 and What to Expect for the Future

With the component shortage affecting many industries, including the display industry, some analysts anticipate relief is on the way, but not until 2023 at the earliest. The electronics supply chain’s just-in-time build-to-order pipeline approach, which has been in place for over two decades, was not designed to handle the unexpected surge in demand for consumer electronics at the start of the epidemic. New COVID-related shutdowns in other countries, combined with rising demand for consumer electronics and an unprecedented shipping bottleneck, have many concerned that we may see fewer gadgets. Many routes for raw materials and bulk electronic components were closed due to the pandemic, leaving manufacturers with half-finished products and idle capacity. Many components are sourced from Asian supply chains. Shortages are not the only issue; growing prices are as well. As demand for electronic components grows, supply shrinks, and prices rise. When it comes to producing displays, there are several components that are currently affected, including a polarizing filter, a glass plate with a transparent electrode pattern, the liquid crystal material, a clear common electrode on glass, a polarizer whose axis is crossed compared to the first polarizer, and either a reflective surface or a light source makes up the basic liquid crystal display.

When it comes to glass, some suppliers have been feeling the effects of the lack of polyvinyl butyral (PVB). The availability of the critical material for laminated glass has been low and can be attributed to several causes such as reduced supply and increased demand from sources such as large TV displays.

China’s Zero Covid-19 lockdown restrictions continue to disrupt facilities producing polarizers. A significant contributor, Nitto Denko maintains a polarizer backend process plant in Shanghai specifically. The Nitto Denko Shanghai backend process line processes polarizers used by many panel manufacturers. A polarizer is an optical filter that allows light waves of one polarization to flow through while blocking light waves of others. Shanjin Optoelectronics in Guangzhou may close because of Covid lockdowns and decreasing polarizer manufacturing. To compensate for decreasing HMO production, panel makers have resorted to other polarizer manufacturers such as Taiwan-based CMMT, Sunnypol, BQM, and Samsung SDI, but a sudden increase in demand to these manufacturers has exacerbated lead times.

A severe shortage of display driver chips is currently causing problems for LCD and OLED panel makers. As a result, everything from smartwatches to smartphones, smart appliances, and infotainment systems will be affected. Every new automobile or smartwatch includes one or more display panels, thus increasing demand.

These are not the most expensive chips like the CPUs, GPUs, or SoCs that go inside gaming consoles or mobile devices, which are complicated and can cost anywhere from $100 to $1,000 or more per unit. On the other hand, display driver chips are a straightforward component that converts signals from your device. Nonetheless, the shortage of these driver chips will almost certainly result in more delays and price increases for items that are now in great demand. As chip manufacturers fight to catch up with the demand, it has resulted in unforeseen discontinuation of some products that would normally have a phase out period and order for some products are just not being accepted.

Transportation is another consideration in restoring manufacturing efforts. With the chaos at ports showing no signs of abating and prices for a wide range of commodities continuing to rise, the globe is coming to terms with a sobering realization: time alone will not be enough to solve the Great Supply Chain Disruption. It will require an investment of money, technology, and a rethinking of the incentives that exist in global commerce. More ships, warehouses, and truck drivers will be required, none of which can be gathered fast or inexpensively.

Rising costs are fueled by chaos in factories, ports, and shipping yards, as well as the market domination of huge corporations, which is driving up prices and complicating the manufacturing process in 2022. Basic liquid crystal display components such as polarizing filters, glass plates, and chips are still facing shortages. Through all of this, Focus LCDs’ remains committed to delivering to customers, and many of these supply chain disruptions are being mitigated with extensive market research and testing to minimize pricing and ensure enterprise-grade reliability and quality.