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15
June
2012

Uncertainty clouds Western economies

With uncertainty clouding Western economies, continually growing demand for energy-saving products in China is the only bright spot.
According to WitsView, the panel research arm of TrendForce, the estimation of total LCD TV shipment in 2012 is revised down from 216.5 million units to 214.5 million units, with a YoY growth of 7% and a possibility of further downward revisions if global economic climate continues to worsen in H2’12.

Estimation of total demand of LCD monitors (including AIO) in 2012 is also revised down by 5 million units to 176 million with an estimated annual regression of 1.8%. The downward revision is most pronounced for LCD monitors excluding AIO, with estimation revised down to 4 million units to 162.5 million. NB shipment estimation is also revised down by about 7 million units to 207.3 million (including 16.9 million netbooks) with a YoY growth of only 6%.

Burrell Liu, assistant research manager at WitsView, pointed out that the weak global overall economic performance, the deadlock in Eurozone, their negative impacts on consumer confidence, and the drop of May PMIs in both China and the Eurozone are main reasons behind the revision as the market is increasingly shrouded in uncertainty.

Domestic Chinese brands are quietly gaining grounds in Q1 global LCD TV shipment, with Chinese brands TCL, Hisense and Skyworth as the fifth, eighth and tenth top global LCD TV brands, respectively. Under this trend, Hisense and Skyworth have the potential to advance further to seventh and ninth top spots, respectively.

LED TV penetration rate in Q1 is gauged at 53.4% globally (fig. 2) and 66.1% for Chinese brands. Thanks to the mainland government’s policy to subsidize energy-saving products, LED TV penetration rate is expected to grow further in China, which in turn will slightly push global penetration rate up to 70.1% by WitsView estimation.

The global TV penetration rate in Q1 is 15.3%. The launch of CCFL 3D model with low-cost LCD TV panels by LGD in the end of last year helped push demand for the brand up as well as increase 3D TV penetration rate to an estimated 19.4%. (fig. 3)

In terms of shipment by brands region-wise, total market share for Japanese brands in Q1 is only 25.5%, a sharp drop from the 32.4% in 2010 and 29.1% in 2011 and with a QoQ of 24% in Q1. Market share for Korean brands in 2010 and 2011 is 30.3% and 30.9%, respectively, and the number reached 31.4% in Q1’12.

Chinese brands also saw market share grow from 20.2% in 2011 to 22.3% in Q1’12. Based on analysis of data from LCD TV brands and assembling supply chains, ratio of outsourcing by brand is estimated to drop by 1~2% to 31~33% compared to the previous year. In terms of brand and panel supply analysis, CMI is recently aggressive expanding its new size products.

As companies set profit-oriented business strategies, total shipment by top and second-tier brands in China will reach over 35~40%, forcing Korean brands to increase supply of in-house panels, inadvertently pushing the general market to readjustment of supply chain structure.

WitView pointed out that, despite uncertain global economic outlook and weak end-market demand, partial panel supply shortage and China’s energy-saving product subsidies help support price growth in a low season. The research institute, however, stressed that observers of panel industry climate cycles must pay notice to the coordination of “amount” and “price” in order to avoid the formation of demand bubble.
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