(Yicai) Jan. 16 -- The capacity utilization rate of China's three largest display panel makers is expected to drop close to a historic low next month as they try to put an end to falling product prices caused by ample supply and soft demand.

BOE Technology Group, TCL China Star Optoelectronics Technology, and HKC Optoelectronics Technology extended the Chinese New Year holiday for their plants to two weeks from the usual one week, starting on Feb. 10, Alex Kang, chief analyst for display business research at UK analyst and consultancy firm Omdia, said in a research report released yesterday. Therefore, the three firms' average capacity utilization rate will fall to about 51 percent in February.

The three display panel giant's capacity utilization rate will drop below 60 percent next month, likely nearing the historic low of about 50 percent, Zhang Hong, television research director at China's Sigmaintell Consulting, told Yicai. The figure was about 65 percent in January last year, when the 2023 Chinese New Year was celebrated, Zhang noted.

One of the main reasons behind the plunging capacity utilization rate of China's three largest display panel makers is the weak demand, Li Yaqin, general manager at Sigmaintell Consulting, told Yicai.

If they do not lower the rate, prices will fall again, causing some products to become loss-making again, Li noted, adding that firms across the whole display panel industry consider making a profit as the main objective from where business strategies need to be adjusted. Profitability will also become a main indicator for mergers and acquisitions in the display panel industry, Li pointed out.

The global capacity utilization rate of display panel suppliers will fall below 68 percent in the first quarter, according to the research report released yesterday by Omdia. The figure among Chinese mainland vendors, which occupied nearly 68 percent of the global market last year, will be even lower next month because of the Chinese New Year holiday.

BOE, TCL China Star, and HKC are expected to account for about 58 percent of the world's total deliveries of display panels for liquid crystal display TVs this year, down from over 60 percent last year, impacted by their clients' diversified strategies in terms of product procurement, Zhang said, adding that carrying out on-demand production and capacity dynamic control will be the three giants' normal business operating strategy this year.

Editors: Tang Shihua, Futura Costaglione