Public company display capex, display equipment spending and equipment supplier display revenues and margins all dipped in Q3’21 relative to Q2’21 and we may not see much of a rebound in Q4’21 based on our equipment spending forecasts.

Public company display capex fell 8% Q/Q and 26% Y/Y to $4.4B, the lowest since Q2’16. Display equipment spending estimates on an install basis fell 43% Q/Q while rising 6% Y/Y to $3.2B, the lowest since Q1’20. Revenues for the 36 publicly traded display equipment suppliers we track fell 13% Q/Q and 15% Y/Y to $2.4B, the lowest since Q2’20. All of this data can be found in our Quarterly Display Supply Chain Financial Health Report (一部実データ付きサンプルをお送りします).

Display Capex and Supplier Revenues

Margins also declined across all parameters, but did remain at elevated levels:

• Gross margins fell from 43.2% to 42.4%;
• Operating margins fell from 19.4% to 18.2%;
• Display equipment operating margins fell from 12% to 8%;
• EBITDA margins fell from 22.4% to 21.7%;
• Pre-tax profit margins rose from 19.5% to 19.3%;
• Net margins fell from 15.3% to 14.9%.

The gap between the company OPMs and the display equipment OPMs in the chart below is a good visual on how much more profitable the semiconductor equipment business is, relative to the display equipment business.

Display Equipment Supplier Margin Summary

Bookings also dipped Q/Q falling 4% Q/Q but were up 85% Y/Y and were the third highest total since Q3’19. Backlog was down 2% Q/Q and 20% Y/Y to $2.2B, the lowest since Q2’16.

AMAT was shown as #1 for the first time since Q3’20. It edged Nikon by $11M with Canon dropping to #3, followed by TEL and V Technology. Companies gaining more than a ½ point of share in the top 15 in Q3’21 included AMAT, Nikon, V Tech., ULVAC, Charm and AVACO. Companies losing more than a ½ point of share in the top 15 included Canon, Wuhan Jingce, AP Systems and SCREEN.

13 companies had Q/Q growth in display equipment led by HB Solution, Charm and INVENIA all over 100%. 23 companies were down Q/Q with Philoptics, TOPTEC, HB Tech, Viatron, Nissin and SEMES all down over 50%. 13 companies had Y/Y growth led by Jusung, EO Technics and HB Solution, although, HB Solution would be down if KMAC was included in the Q3’20 figure. Six companies grew over 50% Y/Y with Nikon and Canon each represented.

Of the companies we are tracking, 19 earned at least 50% of their revenues from display equipment, same as last quarter. However, the blended share fell for the third straight quarter falling from 11% to 10% as semiconductor equipment spending outgrew the display market.

Looking at just the display equipment businesses, operating income fell 33% Q/Q while rising 8% Y/Y to $560M, the third highest since Q3’19. Excluding Canon, it was a 22% drop. On an operating margin basis, Device Eng. continued to lead, reaching 34% followed by Jusung up to 27%, EO Technics at 22% and AMAT at 20%. Canon’s margins fell from 14% to 1%, which caused much of the Q3’21 drop. Eight companies had negative operating margins.

Liquidity remains a problem at LIS and INVENIA with over 100% debt/equity and net debt/equity levels. LIS now has $72M in debt and $2M in cash.

Operating cash flow fell 29% Q/Q while rising 2% Y/Y. AMAT, Canon and TEL accounted for 84% of the industry’s operating cash flow, down from 88% last quarter. Free cash flow fell 42% Q/Q and 12% Y/Y to $2.2B, the lowest value since Q2’20. AMAT, TEL, Canon and SCREEN accounted for 99% of industry free cash flow, up from 94% last quarter.

For more insights into both display and display equipment suppliers financial results, please see our Quarterly Display Supply Chain Financial Health Report (一部実データ付きサンプルをお送りします).