[News] Sluggish End-User Demand Cause The Downward Price Adjustment in TV Panels

2023-09-26 Consumer Electronics editor

Source to UDN, in the wake of sluggish demand in the end-user market, the final stretch of September witnessed the tail end of a promotional surge in TV panel inventories as prices for panels below 50 inches seemed to reach a state of stagnation.

According to TrendForce’s view, Eric Chiou, Senior Research Vice President at TrendForce, has sounded the alarm, suggesting that TV panel prices may undergo a downward adjustment starting in November. This reflects a fourth-quarter demand that falls short of expectations, with continued weakness expected in the traditional off-season demand for the first half of next year.

Industry insiders contend that as TV panel pricing faces pressure to halt its upward trend, companies like AUO and Innolux, despite briefly enjoying profits this quarter, are likely to experience a downturn in their fourth-quarter performance, making it challenging to achieve an annual turnaround.

Eric Chiou analyzes that TV panel prices started rising in March this year. This was primarily a response to panel manufacturers’ consensus decision to reduce production after suffering heavy losses. However, due to the impact of a sluggish economy, terminal demand has failed to see significant improvement. Additionally, brand manufacturers, in response to rising panel prices, began planning early for the procurement of year-end panel needs in the second quarter and from July to August. This trend is already reflected in the pricing of TV panels below 50 inches, which has shown signs of stagnation since September.

In response to warnings from research institutions, it is feared that TV panel prices may cease to rise and may even decline in the fourth quarter. Yang Chu-hsiang, General Manager of Innolux, recently stated that the panel market’s prosperity is as unpredictable as a typhoon, and vigilance is required regarding the consumption power of the terminal market. He emphasized that panel manufacturers would not rush to maximize production but would instead make minor adjustments to meet demand steadily. He also reiterated the expectation that the second half of the year would be better than the first, with next year surpassing the current one.

During a recent earnings conference, the Chairman of AUO revealed that TV panel shipments increased by 5 percentage points in the second quarter. Coupled with cost-saving efforts, the operating gross profit turned positive for the quarter, and losses narrowed compared to the first quarter. Looking ahead to the third quarter, Peng remains optimistic, stating that “the worst time for the panel industry has passed.” With back-to-school and year-end sales seasons approaching, he anticipates that the “second half of the year will be better than the first.”

However, as the fourth quarter faces unfavorable global economic conditions, Eric Chiou believes that brand-end inventory for events like China’s Singles’ Day and the U.S. Black Friday promotions is taking a more pessimistic and conservative stance. September marks the tail end of the high-volume inventory period for TV panels, and with Chinese panel manufacturers having a significant share of TV products, they are expected to profit handsomely this season. On the other hand, Taiwanese manufacturers, with a relatively lower share of TV panel shipments, may hover near breakeven or see modest profits in the third quarter. If TV panel prices halt their upward trend in the fourth quarter, achieving the annual goal of returning to profitability may prove elusive.