Slowing Notebook PC Replacement Cycle Leading to Higher Resolution Displays

The global notebook PC display market fell 23 percent year over year in the first quarter (Q1) of 2016, according to IHS.

Due to the low profitability of high definition (HD) notebook PC panels, panel makers have begun to decrease production, in favor of full HD (FHD) panels. FHD panels are therefore expected to enjoy high growth through 2018 and could become mainstream in notebook PCs in three years. However, there still are many customers concerned more about price than specification upgrades. In addition to FHD resolution, some panel makers have begun promoting even higher ultra HD (UHD) resolution.

“Microsoft introduced its high resolution Surfacebook last year, which is one reason higher definition displays are now becoming the key differentiator for premium notebooks,” said Jason Hsu, senior principal analyst for display supply chain at IHS Technology.

Price erosion struck the notebook PC market hard in 2015, as PC manufacturers by and large produced low-cost notebooks to maintain market share, rather than introducing new and innovative designs. In fact, half of all notebook PCs sold in 2015 were priced below $500, and laptops costing $300 or less grew to encompass 15 percent of the total market in the fourth quarter. While PC replacement was driven in the past by specification upgrades, today’s consumers mainly use their PCs to browse the Web or check emails, so consumers have become less concerned with upgraded replacements and notebook PC sales continue to decline.

“Performance is no longer the key motivation for customers to replace older PCs,” Hsu said. “Industry players are now reviewing what might be the next driving force for laptops and finding that displays could play a larger role.”

While a good differentiator for premium devices, higher resolution displays also tend to lead to higher power consumption and shorter battery life, which is a dilemma for the industry. “UHD panels are mostly used in premium notebook PC models, which also usually have thinner and lighter form factors,” Hsu said. “There is therefore less room for brands to increase battery capacity these days, which is why notebook PC brands are urging panel makers to find ways to lower power consumption by higher-resolution displays.”

Displays using oxide and low-temperature polysilicon (LTPS) panels are designed to address the need for higher resolution and low power consumption. Apple has been very aggressive in adopting oxide-substrate panels for its iMac and iPad Pro product lines, and the company is reportedly introducing oxide panels in its upcoming line of Macbooks. With Apple leading, Samsung Display and LG Display are now increasing investment in expanded oxide-panel manufacturing capacity.

While today’s LTPS capacity is mainly used for smartphone panel production, it will also be coming soon to notebook PCs and tablet panels. JDI, AUO, Tianma and other panel makers are actively promoting LTPS panels for notebook PCs, and IHS anticipates the first LTPS notebook panels to be in commercial production by 2017 or even sooner.

“With panel demand falling this year, panel makers may have to balance the pressure between fab utilization and profitability,” Hsu said. “Investing in next generation technology may not yield immediate returns while continued reliance on mature technologies may decrease ongoing profitability.”

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