As the Russian-Ukrainian war directly affects Eastern Europe and, indeed, the entire European market, the supply of raw materials has destabilized and prices continued to soar, exacerbating inflation and pummeling the global economy. In addition, lockdowns and work suspensions caused by the recent pandemic outbreak in China and the government’s insistence on a dynamic zero-COVID policy may lead to complex problems such as reductions in factory production efficiency and logistical delays. TrendForce indicates, the uncertainty of current global political and economic circumstances have upset demand for three major display applications including TVs, LCD monitors, and notebooks, overshadowing 1H22 with pressure to correct expectations.
TV panel prices nearly bottomed out, driving demand in TV market remains challenging
In terms of the TV market, due to the deleterious effect of the Russian-Ukrainian war on inflation and assuming consumer budgets remain unchanged, expenditures on non-essential items will fall, deferred demand for TV products. In addition, due to issues in 2021 such as the shortage of cargo containers and port congestion, shipping costs spiked, indirectly inflating the production cost of TV sets. Before the pandemic, shipping costs on a 65-inch TV was US$9. Last year, this jumped to US$50-US$100, scaling with TV size. Even though current TV panel pricing has plunged by 30% to 40% compared to last year's peak, the fact that freight costs are not expected to improve in 2022 will inevitably affect TV brand promotions and scale of stocking during the peak season of overseas markets in 2H22. Therefore, TrendForce revises downward its TV shipment forecast for 2022, from the original 217 million units to 215 million units, reducing annual growth rate to 2.4%.
Stay-at-home economy effect vanishes, war worries dampen demand, dragging on demand for LCD monitors
In terms of the LCD monitor market, the scale of the 2022 market will be smaller than that in 2021 as the overall market is no longer supported by strong demand from last year's stay-at-home economy. In addition, relatively stable past demand originating from the European market ran headlong into the Russian-Ukrainian war at the end of February. This, coupled with a subsequent butterfly effect that may lead to a downward revision in demand, as well as problems such as inflation and sustained high freight rates, make it difficult for brands to realize aggressive shipping goals. Therefore, TrendForce preliminarily revises downward its LCD monitor shipment forecast for this year, from 144 million units to 142 million units, expanding annual negative growth rate to 2.3%, without ruling out a possibility of further downward revision.
Notebook demand under downward pressure from inflation and soaring component inventories
In terms of the notebook computer market, TrendForce revises downward its original 238 million unit shipment forecast to 225 million units, a decrease of 8.5% YoY. There are three primary factors to this downgrade. First, Chromebooks benefited from the pandemic driving demand for distance education in 2021, accounting for 15% of total notebook shipments. Chromebook shipments are forecast to decline by more than 50% in 2022 as a whole, disrupting total notebook shipments by approximately 7~10%. Second, the conflict between Russia and Ukraine has caused most notebook brands to suspend shipments to Russia. Russia accounted for approximately 2% of global notebook shipments in 2021 and a suspension will also curb the demand for notebook shipments. Third, every notebook brand has revised 2022 shipment forecasts downward by approximately 10-15% on average compared to the beginning of the year, indicating that inflation has clouded these brand’s future demand outlook. The inventory of the entire supply chain including certain in-transit ODM/OEM components, continues to climb while the prices of some components continue to face downward pressure, resulting in intertwined problems and forcing notebook brands to prudently control purchasing momentum, which may further impact the upstream supply chain.
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