© dimitry romanchuck Analysis | August 22, 2013

Weak peak season leads to price-cutting pressure for LCD TV panels

The price drops for LCD TV modules and open cells are around USD4-8, showing no narrowing declines.
The August price information is still chaotic as brands are worried about the possible price losses and turn conservative on panel procurement. Besides, Chinese and Korean makers’ newly built Gen8.5 in China will soon start mass-production, bringing significant impacts to the demand and the supply of large-sized panels, meanwhile, panel makers are aware the price-cutting battle for the sizes between the 40” and the 55” is getting fierce, according to the panel price survey for August conducted by WitsView, the display research division of TrendForce,

WitsView has cut the global LCD TV set shipment to 205.1 million units for this year, dropping 0.7% YoY, but the final figure may be only 202-203 million units, dipping 1.6% YoY, as the sales to clients don’t recover significantly, which may be the first LCD TV shipment contraction on record. (See table 1.)

The 32” module and open cell are projected to see price drop of around USD 2 for the current month, and the price drop for the 39”module and open cell extends to USD 4-7. INX starts to ship the 39” HD panels in small amount, pressuring the 40” and 42” FHD panel prices largely. The price drop for the 40” comes to USD 6-8, and its gap with the 39” narrows to around USD 3-4.

The 42” module costs and open cell prices are still influenced by the continuously dropping prices of the 39” and the 40”, and the price decline is expected to enlarge to USD 8-10 or more. The price drops for the modules and open cells of the 46”-55”will be USD 6-10 or more. As the downgrades and the regular models of certain sizes crowd the market, and the low-cost 50” (brightness 300 nits) starts to be shipped, the market of the 50”-level products see chaotic price information.

As BOE’s Gen8.5 in Hefei will start the mass-production in Q1 next year, and its Gen6 is mostly used for production of mid-and-small sizes and NB panels. It not only has transferred the main LCD monitor sizes 18.5W, 21W, and 23.6W to its G8.5 in Beijing, but has started to produce NB panels in G8.5, which must influence the supply and the demand of IT products. Affected by the continuously surging panel supply, the 18.5W will see no price change or a small price drop for the current month, and the 21.5W price will decline USD 0.5-1 on panel supply glut. The price cuts for the sizes between the 23W and the 27W are around USD 0.5-1.

Due to the sluggish market, panel makers continue to adjust the annual sales plans, and WitsView cuts the NB panel shipment to 181 million units, dropping 20% YoY, and the set demand is projected at 166 million units. Damped by the soft demand and the previous inventory which needs digesting, the panel price of the current month will drop around USD 0.2-0.3.

WitsView’s research director Burrell Liu says China’s subsidy policy ended and demands return to fundamentals, but panel makers’ capacity stays at the high level, while the panel price noises increase. The TV panel price cuts are deeper than expected with multiple favorable, unfavorable, and psychological factors.
As panel makers hold profits on TV open cells, and the financial revenues swing from losses to profits, it is hard to expect panel makers to stabilize the market by cutting production even with the supply glut in the market.

There will be 6-8 Gen 8.5 fabs in China getting operational between 2014 and 2015, and the competition for sizes between the 40” and the 55” starts, leading to a fierce throat-cutting war. It is difficult for prices to stop drop in the short term, and the large-scale production cut won’t be possible until the end of this year or Q1 next year.


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