Impact of US Tariff Policy on the Display Industry: Increased Pressure to Restructure Asian Supply Chains, Rising AMOLED Materials Costs

On April 9, 2025, the United States implemented a reciprocal tariffs policy, impacting the global supply chain and hitting the display industry. A TrendForce report indicates that optical films and AMOLED materials for displays are being taxed, putting pressure on the Asian supply chain to restructure. China imposed a 34% tariff on U.S. goods, impacting U.S. suppliers' exports to China. The end market might see a drop in demand for TVs and laptops due to increased costs and falling consumer confidence.

Asian Supply Chain Under Pressure: Southeast Asia Hit Hard

The U.S. equal tariff policy, based on trade deficits, has directly impacted export-oriented economies in Asia. TrendForce points out that the Asian region, long a hub for consumer electronics supply chains, especially Southeast Asia, is most noticeably affected. The display industry’s panel production lines and key component supply chains are highly concentrated in countries such as China, Taiwan, Korea, and Southeast Asian countries, and products from these regions now face higher import taxes.

Although most LCD panels and related semiconductor components are not directly exported to the U.S. and thus have not been immediately affected, the overall stability of the supply chain has been challenged. Some brands and contract manufacturers are beginning to reassess their production base configurations, with Mexico emerging as a potential alternative to leverage tariff benefits under the USMCA.

Rising AMOLED Material Costs: U.S. Suppliers Limited

One of the core materials for AMOLED display technology is organic light-emitting materials, which are largely controlled by U.S. suppliers. TrendForce notes that some U.S. material suppliers, to maintain their technological edge, have not set up production bases in China and instead supply Chinese panel manufacturers through imports. After China imposed a 34% retaliatory tariff on U.S. imports, the import costs of these materials have significantly increased.

This move may alter Chinese panel manufacturers' procurement strategies for U.S. materials, shifting towards lower-cost alternative sources, further affecting the shipment volumes and revenues of U.S. suppliers. Since AMOLED materials are high-value-added products with high price sensitivity, rising costs will directly compress profit margins and may delay the introduction and mass production of new technologies.

End Market Pressure Increases: Price Hikes and Declining Demand Coexist

According to TrendForce's estimates, if there are no significant adjustments to tariff policies, considering that brands currently have about three months of inventory in the U.S., end product prices may start to rise as early as the second half of 2025 to reflect the cost pressures brought by tariffs. This change will directly affect consumer purchasing willingness.

With limited consumer budgets, demand for consumer electronics such as TVs and laptops may be squeezed. TrendForce points out that the business IT market was initially expected to recover in 2025, but with an uncertain market outlook, companies may preemptively control IT spending, further slowing the market recovery.

Additionally, some brands have begun to suspend shipments from China and Southeast Asia and are actively evaluating the use of Mexican capacity to mitigate tariff impacts. This strategic adjustment indicates that the supply chain is in a transitional period of reconfiguration.

Industry Response: Suppliers and Contract Manufacturers Adjust Their Strategies

In response to sudden policy changes, major Taiwanese electronics contract manufacturers such as Quanta, Inventec, and Wistron have stated that shipments are currently normal, and no suspension notices have been received. However, both Inventec and Wistron have indicated that they have begun following the USMCA model, assembling AI servers and laptops in Mexico before exporting them to the U.S., and do not rule out the possibility of expanding Mexican capacity.

Wistron further pointed out that if the CPUs in laptops and desktops come from U.S. manufacturers like Intel, and their U.S. value accounts for more than 20%, they may be eligible for tariff exemptions, but the calculation method for U.S. value still needs clarification.

Compal admitted that market visibility in the second quarter is low, and it is necessary to observe the subsequent development of tariff policies and actively discuss countermeasures with customers. Pegatron has chosen to strengthen its North American presence by opening a new office in California and planning to establish a North American production base to respond to potential future policy changes.

Consumer Behavior Changes: Early Purchases and Increased Price Sensitivity

At the retail end, some consumers have begun to make early purchases. According to U.S. media reports, there has been a buying frenzy for high-priced electronic products like iPhones, showing high sensitivity to potential price increases. This phenomenon also reflects consumer uncertainty about future price trends, which may further exacerbate market volatility.

References

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