Flashing square on touch bar when display is off

2017 13" MBP with touch bar running 10.13.6. This just started recently - There will be some flashing squares on the rightmost side of touch bar when touch bar is dimmed or blank (after a period of inactivity.) It will be mostly normal when the touch bar is in normal brightness, except that sometimes when going back from blank to full brightness, it takes a few seconds to clear the squares.

Tried resetting NVRAM and SMC, and it does not make any difference. Wondering if anyone hit the same issue and if this requires any hardware replacement?

Thanks.