Rise of Chinese Businesses Also Puts Negative Effect
Price of LCD panel collapsed up to 37% compared to beginning of this year. If oversupply is not settled, profitability for display industries will worsen starting from 4th quarter.
According to market research company called Witzview based on panel open cell, prices for 32 ~ 43-inch TV panels during first half of December fell 3% from last month. 55-inch panel also fell 3%. Prices for 32-inch and 55-inch panels collapsed 37% and 26% respectively compared to January.
Open cell indicates a half-finished product where backlight unit and driver IC are not assembled. As TV manufacturers set up production system where they make their own TV sets by assembling parts for panels, distribution of open cell LCD has become a trend. TV industries are planning to reduce production cost and differentiate product design by open cell LCD.
It is estimated that amount of decrease for LCD panels’ prices will increase as end of the year peak season for TV is approaching because Chinese display businesses are increasing rates of operation for their facilities after investing in them.Downward trend has become faster as demands for TVs have become smaller due to global economic recession.
It is even harder to make profits off of 32-inch TV panels because proportion for 32-inch out of TV displays that are produced by Chinese industries is the greatest. A phenomenon where industries are selling for less than production cost is also taking place as competitions become fiercer.
Panel manufacturers are busy to protect their profits. Even if sales increase due to increased sales volume as TV prices decrease at the end of this year, operating profit will fall rapidly. Forecast for next year’s display markets is also unclear. Major panel manufacturers such as BOE, CSOT and others will increase their supplies after carrying out investments into Gen.8 facilities and it is also threatening to see how they are expanding supplies of 50 and 60-inch panels after they are done with 32-inch.
Witzview is estimating that shipments of large panels will decrease for the first time from global display markets and there will be 794 million panels that are 4.1% less than last year. Instead it is estimating that average size centered on TVs will increase and size of overall shipments of large panels will be 8% greater next year than last year.
South Korean industries are looking for way outs with premium products. They will focus on increasing ultra-high quality 4K panels that are 50-inch or higher. Their strategies are to get both profitability and sales with large panels that are better than Chinese manufacturers and technologies on 4K quality. Samsung Display will focus on premium LCD panels with Quantum Dot technologies while LG Display will focus on OLED TVs and low and medium-priced 4K TVs.
Staff Reporter Bae, Okjin | withok@etnews.com