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LCD TV Panel Shipments Fell Just 0.9% Monthly in November as Chinese New Year Takes Over as Main Demand Driver

22 December 2016 Display Iris Hu

WitsView, a division of TrendForce, reports that global shipments of LCD panels for TVs totaled 22.79 million units in November, representing a slight decrease of 0.9% compared with October. Even though the stock-up demand related the North American holiday season and Singles’ Day in China receded during November, TV panel shipments remained strong as branded TV makers continued to replenish their inventories for the upcoming Chinese New Year sales.

“During this year, the global average price of 32-inch panels has risen over 40% from its monthly low,” noted Iris Hu, research manager of WitsView. “Soaring prices in the 32-inch segment in turn have driven up production costs of mainstream-size TV sets, squeezing profits of both TV makers and retailers in channel markets.”

In response to this situation, TV brands since October have started to focus more on promoting TV sets larger than 32 inches. This shift towards larger models led to the small decrease in unit shipments of TV panels in November. Panel shipments by area, however, have been relatively stable during the month as TV brands lay the groundwork for Chinese New Year sales following the year-end holiday season.

LG Display (LGD) achieved a new monthly high in its TV panel shipment for this year in November with unit volume totaling around 4.95 million. Set against the prior month, LGD grew its TV panel shipment by 8.4%. LGD has developed a significant presence in China’s TV panel market and cultivated close relations with local first- and second-tier brands (and with OEMs). Even as panel orders for the North American holiday season were winding down, LGD could continue to expand its shipments on the back of another wave of peak season demand related to the Chinese New Year.

LGD’s November shipments also reflected increasing demand for large-size and UHD TV panels in China. The panel maker’s shipments of products sized 55 inches and larger increased 13% on average compared with the prior month. For just the 55-inch size segment, monthly shipments jumped 17%. Going forward, the trend of TV panels getting larger will become even more noticeable. Additionally, UHD resolution products represented 45% of LGD’s TV panel shipments in November. This means that LGD currently has the highest UHD penetration rate for its TV panels compared with its competitors.

From the start of this year’s second half to the end of November, monthly shipments of 40-inch TV panels from Samsung Display (SDC) reached 1.5 to 1.55 million units. SDC kept the 40-inch shipments at a high level as to meet the demand from TV brands that want to stock up on this product in advance of the closure of SDC’s L7-1 fab at the end of year. SDC has also seen rising demand for its 55- and 65-inch panels on account of year-end promotions by TV brands. Nonetheless, the conclusion of stock-up activities for Christmas holidays caused SDC’s total TV panel shipments for November to dip a bit by 0.6% compared with October, totaling around 4.42 million units.

TV panel shipments from Innolux in November amounted to 3.5 million units, down 7.6% from the prior month. Innolux earlier had arranged collaborative projects with TV brands to sustain shipments of its 23.6-inch panels. However, these projects ended in the third quarter, and shipments of the product began sharply in the fourth quarter with monthly declines averaging 25%.

On other hand, Innolux enjoyed strong shipments of its 39.5-inch panels. The pending closure of Samsung’s L7-1 fab, which produces 40-inch panels, has triggered a wave of demand for the 39.5-inch. To increase shipments, Innolux adjusting the capacity utilization of its two Gen-6 fabs so that more of their capacity goes to the production of 39.5-inch panels rather than the larger 65-inch panels. For a long time, Innolux has been unable to raise the yield rate of the 65-inch panel production to an ideal level. This adjustment therefore will relieve the cost burden related to the persistent low yield of the 65-inch while fulfilling the orders for the 39.5-inch.

TV panel shipments from China Star Optoelectronics Technology (CSOT) took off after the panel maker completed capacity expansion for its second Gen-8.5 fab. Since this August, CSOT’s monthly TV panel shipments topped 3 million units on average. In terms of ranking, CSOT was finally able to move up within the top six TV panel suppliers by gradually widen its lead over AU Optronics (AUO) and catching up to BOE Technology (BOE). CSOT’s TV panel shipments came to 3.07 million units in November, up 0.7% from the prior month and exceeding BOE’s figure slightly by 3,000 units. This result put CSOT in the fourth spot of the global monthly TV panel shipment ranking for the first time.

BOE’s TV panel shipments for November were around 3.07 million units, representing a monthly decrease of 10.4%. BOE has registered five consecutive months of decline for its TV panel shipments since July, and the downtrend will continue as the panel maker has assigned more its available capacity to make notebook panels this fourth quarter. BOE’s 32-inch panel shipments in November were around 1.94 million units, down 30% from this year’s monthly peak of 2.78 million units. The sharp drop in the 32-inch segment has had a huge impact on the entire TV panel shipments for BOE.

AUO’s TV panel shipments in November fell 1% compared with October to 2.38 million units. The small decline was caused by the panel maker’s decision to allocate some its Gen-6 capacity for attaching polarizer to 75- and 85-inch panels. AUO’s monthly TV panel shipments, however, have gone up to an average level of 2.4 million units since the third quarter, when the panel maker’s L8B facility returned to full operation after completing its capacity expansion. With the expanded fab, AUO was able to raise 55-inch panel shipments by almost 30% from the second quarter to the fourth quarter of 2016.

Hu pointed out that shipments of TV panels in December are going to fall. “Due to requests from clients, LGD delivered most of its December panel shipments in advance,” said Hu. “This, along with the closure of Samsung’s L7-1 fab, will cause a 9% monthly drop in the global TV panel shipments.”

Looking at the entire 2016, WitsView estimates that TV panel shipments by unit will total around 259.5 million, down 3.8% compared with 2015. However, shipments by area will expand by 6.9% annually owing to the increasing demand for larger TV panels. “The average size of LCD TV panels will reach 43.6 inches this year, which is 2.2 inches more than last year’s average,” said Hu.

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