FOCUS CHINA – WitsView: TV Brands’ 2Q10 Panel Procurement Volume Dropped by 15% QoQ
Based on the latest survey by WitsView, a research division of TrendForce, the panel procurement volume among China TV brand vendors has been gradually decreasing in the latest three quarters. In 4Q09, the overall TV panel procurement volume reached a record high with 94 million units. Nevertheless, it fell by 27% QoQ to 76 million units in 1Q10 because of the seasonality and fewer working days. Amid the inventory problem, 2Q10 procurement volume shrank again by 15% QoQ to 64 million units, recording merely 70% of 4Q09 procurement volume.
Aside from the seasonality and inventory problem, WitsView’s analyst pointed out that there are two other critical factors leading to this issue. Firstly, international brands, such as Samsung and Sony, launched price promotions aggressively which pressured the local brands which heavily relied on price competitiveness. As market share of international brand gradually increases, it directly impacts local brand vendors’ panel procurement volume. In addition, product shift is another issue – China brands were keen to launch LED TV, whereas the current LED panel supply could not meet the rising demand. Amid reduced procurement volume in CCFL panels, coupled by the insufficient LED panel supply, panel procurement volume was not able to maintain at the original level.
In terms of TV panel procurement among major brand vendors in June, Skyworth topped the market share with 20%; others such as Hisense, Changhong, Konka, and Haier accounted for 15~18%, remaining relatively flat compared to that in the last couple of months. On the contrary, the procurement ratio of TCL fell to 7% in June while the average procurement ratio was at 20% in 1Q10. WitsView’s analyst indicated that TV sales performance was not particularly outstanding in 1H10 during Labor Day and the Chinese New Year holidays. From brand vendors’ point of view, the higher the panel procurement volume during those periods, the higher their current inventory pressure, therefore, their procurement plan needed to be adjusted significantly.
Looking into 3Q10, WitsView’s analyst further indicated that panel demand is forecast to revive due to the continuous decline in panel price, as well as the upcoming China’s National Day. Yet, TV brand vendors’ actual procurement volume may still depend on the degree of current inventory closeout.