TV manufacturers are predicted to go through difficult times because Samsung Display and Panasonic are telling them that they are going to stop producing LCD panels for certain models. As demands for large TVs are focused with China at the center, there is a higher chance that price for large panels might increase. As Chinese TV manufacturers are going after markets for UHD LCD TVs with 55-inch or bigger screens, they will increase demands for South Korean panels.
According to an industry on the 10th, Samsung Display made an announcement that it will stop supplying 40-inch LCD panels to TV manufacturers at the end of this year. Panasonic also made an announcement that it will stop supplying 32-inch and 55-inch LCD panels, which are being produced at facilities in Himeji, at the end of September. TV manufacturers that have been receiving panels from these two businesses now have to secure new supply network.
Samsung Electronics’ Video Display Business Department is affected as Samsung Display is planning to stop supplying 40-inch panels. Although it has consistently diversified its supply network in Taiwan and China, it is still affected by this news heavily since it receives most of its supplies from Samsung Display.
“We are currently looking into many ways such as increasing percentage of TVs that are bigger than 43 inches since not only production of 40-inch LCD panels are going to decrease, but global demands for large TVs are increasing also.” said President Kim Hyeon-seok of Samsung Electronics’ Video Display Business Department.
Samsung Electronics already reduced percentage of panels from Samsung Display and increased percentage of panels from Taiwan and China. To increase profit ratio while it is difficult to look for opportunities to grow in TV markets, Samsung Electronics needs to look for cheaper panels that have similar performance.
Japanese TV manufacturers also have to change their supply network for LCD panels. Not only is Panasonic looking to stop operation of its facilities in Himeji, but Sharp was also bought out by Taiwan’s Foxconn. They are at a situation where they have to increase percentage of panels that they purchase from South Korea and Taiwan. It seems that LG Display will benefit from Samsung Display decreasing its supply of LCDs.
Fact that average size of global TVs increased from 37.1 inches to 40.8 inches from last year to this year and set to increase to 42.3 inches in 2019 will also affect changes in supply network for TV manufacturers.
Chinese TV manufacturers are speeding up their production of 55-inch and 65-inch UHD TVs. Although Chinese panel manufacturers such as BOE, CSOT and others are mass-producing large LCD panels, yield and quality of their panels do not compared to panels from South Korea and Taiwan since they have been producing small and medium panels mostly. Even though panels from South Korea and Taiwan are more expensive than panels from China, Chinese TV manufacturers have no choice but to use panels from South Korea and Taiwan that have better quality.
According to IHS, shipments of TVs that are bigger than 55 inches from China during first quarter of this year (3.8 million) increased by 80% compared to first quarter of last year. As new TV brands are looking to reduce their prices of TVs, demands for large TVs have increased rapidly. This percentage is almost double the growth rate of global markets.
“Although we predicted early this year that average size of TVs globally will be about 41 inches, average size can be 42 inches or even 43 inches since markets for panels for TVs that are bigger than 55 inches are growing rapidly.” said Director Park Jin-han of IHS.
Staff Reporter Bae, Okjin | withok@etnews.com