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04
June
2012

TrendForce: CMI’s new panels to make inroads in China

According to WitsView and Chinese research institute Σintell, China's top 6 TV brands’ shipments in Apr-12 peaked during the period of 1Q12 with a higher-than-expected MoM increase of 37%, amounting to 4.562 million units.
The total top 6 TV brands’ panel procurement volume also spiked in Apr-12 during Jan-12 to Apr-12 by achieving 4.029 million units with YoY growth of 4.6%. However, as TV sales during May 1st Labor Day merely increased by 0.5% YoY, the overall inventory levels rose to a total of 5 weeks, forcing brand vendors to adjust their inventory levels in response to the slow sales during Labor Day holidays.

Thus, both shipments and procurement volume are estimated to be revised downward by 32% and 17.2% with the volume of 3.108 and 3.337 million units respectively. The figures above are based on China Top 6 TV Brand Shipment and Panel D

WitsView’s Research Director, Burrell Liu, indicates that in addition to Europe’s persisting political and economical uncertainty, the LCD TV demand in the Japan market has seen a sharp decline. Therefore, worldwide LCD TV demand in 2012 is expected to fall from 216.5 million units to 214.5 million units with YoY increase of 7%. However, once the European debt crisis is resolved, LCD TV demand is likely to increase during the peak season in 2H12 as China’s new subsidies for energy-saving will take effect by Jun-12.

The top 6 TV brands’ average export ratio achieved 29% in Apr-12 with an average ratio of 26.6% during Jan-12 to Apr-12; in addition, their export ratio in last year had reached 22.3%, making 26% export ratio in 2012 more attainable. TCL, Hisense, and Konka outperformed peers with export ratio of 40.3%, 28.3%, and 23.1% during Jan to Apr-12, impacting international TV brands to a certain extent. Meanwhile, China top 6 TV brands’ penetration rates of LED and 3D reached 68.1% and 21.2% respectively. (see below tables)

( Media Not Available ) © TrendForce

( Media Not Available ) © TrendForce


CMI’s shipments to China top 6 TV brands in Apr-12 maintained its leading position with shipments amounting to 1.315 million units and 32.6% market share, followed by LGD (19.3%), AUO (18.9%), and Samsung (12.4%). Recently, CMI has been successful in prompt development of new-sized products and complete client distribution; it is estimated CMI will further mass produce 58” TV panels to take up 55” ~ 60” Japan and China TV panel market with the aim of digesting capacity in G5.5.

We are not certain of the prospective sales of CMI’s new-sized products yet; however, as TV sales during May 1st Labor Day was not in line with market expectations while China’s demand for LCD TV is sliding, a further observation is needed to conclude the future LCD TV panel price trend and panel market sufficiency. China’s year-long subsidies for energy-saving is expected to launch in Jun-12, offering $100 ~ $450 RMB based on product sizes (19”~31”, 32”~41”, and above 42”) and energy efficiency. A boosting demand for TV spurred by the new subsidy is highly anticipated.

WitsView concludes that CMI has turned its business into profit-oriented and attempted to offset its profit and loss in 2Q12 and further turn loss into profit in 2H12. In terms of product planning, CMI focuses on more profitable panels, such as 39” and 50” panel ones; as for products with higher-cost, CMI avoiding fulfilling clients’ need without knowing their acceptance of price. The strategy above will certainly improve CMI’s profits on its financial statement in a short term; however, it is also a risky move in terms of long-term business strategy.
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