The display budget “stolen” by AI and the impact of rising storage prices on the LCD panel industry

Since the second half of 2025, the global semiconductor market has experienced explosive growth in demand for AI servers and HPC, resulting in a shortage of memory chips and prices soaring to historical highs.

According to data from TrendForce, since September 2025, the spot prices of DRAM and NAND flash memory, the two main product categories in the memory chip field, have increased by more than 300%.

For the first quarter of 2026, TrendForce’s latest forecast is that NAND flash memory product contract prices will increase by 55% to 60% quarterly, and general DRAM contract prices will increase by 90% to 95%.

TrendForce Consulting believes that the shortage situation in the storage market is not likely to be alleviated in the short term. Looking into the future, storage has become an indispensable core resource for AI computing. Under the long-term support of AI servers, high-performance computing and enterprise-level storage demand, DRAM and NAND Flash contract price increases are expected to continue until 2027, and the market's revenue growth momentum is expected to continue until 2027.

As a core component of electronic equipment, memory chips’ skyrocketing prices and supply shortages are being transmitted through the industrial chain, creating a two-way impact on the LCD panel industry.

Supply side: Structural adjustment of display driver chip production capacity, short-term shortage and long-term transfer coexist

On the supply side, rising storage prices are affecting the manufacturing of key panel components. The production of LCD panels is inseparable from the display driver chip, which is responsible for the key function of converting image data signals into pixel drive signals. Its cost accounts for 15%-20% of the total cost of the LCD panel. Display driver chips are usually produced on the mature process of the wafer foundry.

In the second half of 2025, the popularity of the storage market will break the production capacity allocation balance of wafer foundries. As foundries have invested their production capacity in higher-profit chip products related to AI applications, such as power management chips for AI, this has directly led to the narrowing of the production window for display driver chips. The tilt in production capacity has caused the gap between supply and demand of display driver chips to expand and the delivery cycle to extend.

However, this tight supply situation will be offset by new industry trends in the future. TrendForce found that the 8-inch wafer production capacity required for display driver chips is indeed converging globally, but at the same time, mainland China's 12-inch wafer production capacity continues to expand.

This means that the shortage of display driver chips is not due to technical bottlenecks or absolute loss of production capacity, but more to the misallocation of resources in the supply chain adjustment process.

In the long term, the supply chain focus of display driver chips is accelerating towards mainland China. As the new production capacity of domestic wafer fabs in mainland China continues to be released, the shortage pressure of mature processes is expected to be alleviated. This kind of regional migration of the supply chain will become the norm on the LCD panel supply side in the next few years.

Demand side: Short-term stocking supports price differentiation, while long-term cost pressure suppresses mid- to low-end demand, impacting overall demand

On the demand side, the impact of rising storage prices on LCD panel prices presents a complex dual effect. In the short term, the market shows an abnormal trend of "not slow in the off-season".

Due to concerns about the continued rise in prices of core components such as storage in the future, in order to avoid higher subsequent procurement costs, TV, laptop and monitor brand manufacturers have generally adopted a hedging strategy of increasing panel stocking in advance, releasing panel demand in advance and effectively driving up the growth of panel prices in the short term.

The "TrendForce 2026 Panel Industry Chain Supply, Demand and Price Report" shows that in January 2026, the price of TV panels will increase, including 32-inch, 43-inch, 55-inch and 65-inch, which will increase by US$1.

Driven by the price upload of TV panels, display panels are also expected to have a growth trend. Open cell panels are expected to be the first to reflect price increases in January. Mainstream sizes such as 23.8-inch IPS and 27-inch IPS are expected to increase by US$0.1 to US$0.2, while LCD panel module prices will remain flat. Notebook brand customers also tend to actively stock up, thus increasing demand for laptop panels.

In February, TrendForce predicted that TV panel prices are expected to continue to rise, with prices for some monitor panel sizes rising.

The stocking effect brought about by the increase in storage prices has caused the demand for LCD panels to rise simultaneously with prices. However, in the long term, the dual pressures of continued storage price increases and a weak macroeconomic environment may restrain terminal demand.

TrendForce’s latest forecast is that against the backdrop of rising production costs, global TV shipments will reach 194.81 million units in 2026, a year-on-year decrease of 0.6%.

In terms of notebook computers, TrendForce predicts that notebook computer shipments will decrease by 14.8% quarter-on-quarter in the first quarter of 2026 due to the pressure of simultaneous increases in CPU and memory prices, and that full-year notebook computer shipments will decrease by 9.4% annually.

Therefore, as manufacturers stock up in advance and subsequently reduce terminal shipments, as well as control product costs, LCD panel demand and prices may face a decline in the future.

Faced with the possibility of long-term price declines, panel manufacturers' main response may still be to control production and adjust utilization rates to offset the price reduction pressure on the demand side caused by budget reductions.

Conclusion

The "butterfly effect" caused by rising storage prices is changing the supply and demand pattern of the global LCD panel industry. In the short term, the production capacity tilt of wafer foundries and the advance stocking of terminal manufacturers will drive up the price of LCD panels, and there will be obvious differentiation in different application fields.

In the long term, with the release of display driver production capacity in mainland China, the supply shortage problem will gradually ease, but high storage prices may suppress the overall demand for display panels. This industry change triggered by AI may push the global display industry into a new stage of development.