Soaring prices during the second half of 2016 and the planned closure of Samsung Display’s L7-1 fab have created anxieties about supply shortages in the LCD panel market, according to the latest analysis by WitsView, a division of TrendForce. Due to these factors, the share of 40- to 49-inch models in the combined LCD TV set shipments from the top 15 branded vendors for 2016 will be smaller than the projection made at the start of the year by 3.8 percentage points. Hence, the mainstream size bracket of LCD TV sets is unlikely to make the transition from the 32-inch to the 40- to 45-inch, or the mid-size segment.
Annual shipments of the 40- to 49-inch TV sets have been revised downward due to tight supply for panels
WitsView has revised the estimated shipments of LCD TV sets from the world’s top 15 branded vendors for 2016. Specifically, the share of 40- to 49-inch models in their combined annual shipments will be 3.8 percentage points lower than the year-start projection. The revised estimate also shows that the 40- to 49-inch will be the size bracket that experiences the most significant change in the annual shipment share.
With the supply of mid-size panels being constrained, branded TV makers are shifting their purchases towards either ends of the size range. The annual shipment share of TV sets belonging to the 30- to 39-inch and the 55- to 59-inch segments, for instance, will be 1.9 and 0.8 percentage points greater, respectively, than the year-start projections.
“South Korean TV brands initially planned to increase the share of mid-size models in their own shipments to at least 30% this year as to make the mid-size segment mainstream,” said Ricky Lin, research manager of WitsView. “However, LCD panel fabs in southern Taiwan were damaged by an earthquake in February. Furthermore, Samsung Display (SDC) encountered setbacks in implementing the Black Column Spacer (BCS) technology. Instead of expansion, South Korean brands saw their combined shipment share of the 40- to 49-inch models decreased by 5.4 percentage points in the third quarter compared with the beginning of the year.
“South Korean TV makers are nervous about the impact that the limited panel supply will have on their annual shipment targets,” Lin noted. “One of them has started to transport panels by air instead of by sea since the second quarter. All of them have adjusted their orders as well to purchase more panels below or above the mid-size range (e.g. panels sized 32 inches or 50 inches and above).
The 32-inch and the 55-inch saw shipment share growth
TV set shipments from China-based brands were also affected by the earthquake in southern Taiwan and SDC’s issues with the BCS technology. The share of 40- to 50-inch models in their combined shipments for 2016 will be 4.2 percentage points lower than the projection made at the start of the year, according to WitsView’s latest analysis. Conversely, the shares of the 32-inch and the 55-inch models in the combined shipments of Chinese brands will be 2.4 and 1 percentage points higher, respectively, than the year-start projections. The two largest Chinese LCD panel makers are the main suppliers of 32-inch and 55-inch panels, so their compatriot TV brands have taken advantage of the situation by expanding shipments for these two sizes as to achieve their annual targets.
“The six largest Chinese TV brands have been focusing on promoting their 55-inch products this year in order to meet the growing demand for UHD TV sets and maintain their competitiveness against the emerging Internet brands within the domestic market,” Lin pointed out.
WitsView believes the outlook of the LCD TV set market for 2017 is uncertain mainly because the limited supply of panels sized 40 to 45 inches will influence brands’ strategies regarding mainstream-size products. Also, prices of the 40- to 45-inch panels posted an increase of over 40% between the first and third quarters of 2016. Facing such massive cost pressure, second- and third-tier TV brands and OEMs may not be able to remain in profit during the second half of 2016, as prices of TV sets continue to fall.