The utilization gap between China and Japan is now structural

One of the clearest trends in the data is the widening regional gap. Japan's fab utilization is projected to decline from 50% in Q2 to only 33% by Q4 2026, accompanied by a major decline in TFT input area. This is no longer just a cyclical slowdown.

Several factors continue to pressure Japanese manufacturers:

• Aging Gen 4-6 LCD fabs
• Closure of OLED and LCD fabs like JDI Mobara and Sharp K2
• Limited investment in next-generation OLED capacity
• Increasing production concentration in China and Taiwan

Unless new investments emerge in specialized automotive or industrial displays, utilization is likely to remain under pressure.

South Korea's next challenge is optimizing OLED capacity

South Korea has already exited much of the LCD business, but OLED utilization tells a more interesting story. Despite maintaining technology leadership, South Korean utilization remains well below Chinese levels as manufacturers continue balancing premium smartphone demand, OLED TV production, and future IT OLED capacity.

With significant OLED investments already in place, capacity additions have temporarily outpaced end-market demand, resulting in utilization levels hovering around 68%-72%. The next utilization inflection will likely depend more on IT OLED adoption than smartphones.

Fab Utilization for OLED and Mobile LCD, July 2025 – Dec 2026(F)

Flexible OLED remains the industry’s utilization leader

Within OLED manufacturing, flexible OLED continues to operate at the highest utilization levels. Strong flagship smartphone launches, increasing LTPO penetration and continued premiumization are allowing flexible OLED fabs to sustain high loading throughout 2026.

Rigid and hybrid OLED utilization remains comparatively weaker as entry-level smartphone demand is growing more slowly.

Not all backplane technologies are following the same cycle

Looking only at overall utilization hides some important technology-specific shifts.

• a-Si/Oxide remains the strongest performer
  This continues to be one of the healthiest manufacturing segments, with utilization consistently staying above 90%, supported by high-end TV production, large-size IT displays, and premium monitor demand.
• LTPO continues operating at elevated utilization
  LTPO utilization reached nearly 80% during Q2, supported by sustained demand for premium smartphones. As LTPO adoption expands across flagship and upper mid-range devices, panel makers continue to operate these lines at relatively high utilization levels.
• Oxide backplanes remain volatile
  Oxide utilization continues to fluctuate as notebook and monitor demand remains uneven. Until IT display demand broadens across end markets, oxide-based production is likely to remain more volatile than smartphone-focused OLED technologies.

Global TFT input is stabilizing rather than accelerating

After increasing to 88.4 million m² in Q2, total TFT input is expected to soften modestly during the second half. This reflects seasonal inventory normalization, planned utilization adjustments, and greater emphasis on maintaining panel pricing. Importantly, production reductions appear largely intentional rather than demand-driven.

The latest utilization data suggests the display industry has entered a more disciplined phase. Instead of maximizing production, panel makers are increasingly optimizing profitability through controlled capacity management.

Several themes stand out:

• China continues strengthening its manufacturing leadership.
• Japan's structural decline is accelerating.
• South Korea is transitioning toward an OLED-optimized production mix.
• LTPO and flexible OLED remain among the healthiest segments.

Perhaps the biggest takeaway is that utilization is no longer simply a measure of demand, it is a strategic pricing tool. Manufacturers appear increasingly willing to sacrifice short-term volume to preserve healthier industry economics.

The Quarterly All-Display Fab Utilization Report, as its name implies, covers every display technology and application, but a separate Counterpoint report, the Quarterly OLED and Mobile/IT Fab Utilization Report, provides a narrower focus on OLED and LTPS LCD for mobile devices and includes pivot tables to allow segmentation by supplier, country, TFT fab generation, backplane, frontplane or substrate type. Subscribers to this report can see the historical utilization of mobile devices back to Q1 2019 and a forecast by month through Q4 2026. Starting this year, Counterpoint has also introduced a monthly fab utilization report for more granular tracking of display industry trends.