Recent research from Omdia indicates that the depreciation of flat panel display (FPD) manufacturing equipment is accelerating, which will alleviate cost pressures for OLED and LCD panel producers. Omdia forecasts that between 2021 and 2028, depreciation will grow at a compound annual growth rate of 9.3%. Globally, fully depreciated FPD manufacturing capacity is expected to nearly double during this period, rising from approximately 160 million square meters to nearly 300 million square meters. Depreciated LCD capacity accounts for about two-thirds of all FPD capacity and is projected to increase by 60% between 2021 and 2028. This growth is primarily driven by the rapid construction of 10.5-generation fabs between 2017 and 2022. By 2028, depreciated 10.5-generation assets are set to surge from zero in 2024 to nearly 80%.

A similar trend is observed in the OLED industry, particularly for white-light OLED (WOLED) and quantum-dot OLED (QD OLED) production facilities in South Korea. These plants are expected to approach full depreciation by 2028, significantly reducing operating costs and enabling sustainable profitability for large-size OLED TV and display businesses. For 6th-generation and smaller substrate RGB fine metal mask (FMM) OLED capacity, mainly used for smartphone panels, the depreciation rate is also projected to rise from less than 10% in 2021 to over 60% by 2028.

Given that FPD factories require multi-billion-dollar investments, depreciation costs can constitute up to one-third of the total manufacturing cost across various applications, from 6th-generation OLED smartphone modules to 10.5-generation 75-inch LCD TVs. A slowdown in new LCD and OLED fab investments in recent years has led to a rapid decline in manufacturers' non-depreciated assets. This allows them to operate plants at lower utilization rates, produce a more diverse range of products, and maintain profitability in a highly cost-competitive market.

New 8.6-generation RGB OLED factories currently under construction in South Korea and China represent a notable exception to this trend. These facilities are unlikely to benefit significantly from depreciation before 2030. This will encourage manufacturers to diversify production and maintain high capacity utilization rates to spread high fixed costs across a larger number of panels.