Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
?
EE Times-Asia > Optoelectronics/Displays
?
?
Optoelectronics/Displays??

Analyst: LCD TV outsourcing falls short

Posted: 23 Jul 2009 ?? ?Print Version ?Bookmark and Share

Keywords:LCD? LCD TV outsourcing? consumer electronics?

LCD TVs sales may continue to grow during the current downturn, but the recession is resulting in somewhat weakened demand, causing contract manufacturing of such sets to fall short of expectations.

This is according to a new iSuppli Corp. report, which stated that contrary to previous forecast that 35.2 percent of LCD TVs would be outsourced to contract manufacturers in 2008, actual results showed that only 28.7 percent of LCD TVs were outsourced.

This trend is expected to continue in 2009, with outsourcing lagging previous expectations by 5.6 percentage points. In 2010, 2011 and 2012, outsourcing will fall short of the previous forecast by 4.8, 3.2 and 2.6 points.

"The primary reason for this shortfall compared to expectations is weakened demand due to the recession," said Jeffrey Wu, senior analyst for EMS and ODM at iSuppli. "Japanese and Korean OEMs needed to retain enough production in-house in order to rationalize their cost structures and to optimize their internal capacity utilization rates."

While the LCD TV market will continue to grow robustly during the downturn in 2009, the operational and financial challenges caused by the recession are forcing many OEMs to reconsider their internal expansion plans and outsourcing strategies, as well as to initiate changes that are having an immediate impact on the supply chain.

OEM, ODMs post losses
A number of leading LCD TV OEMs and ODMs reported operational losses in 2008. Samsung's Digital Multimedia Division, where its flat-panel TV operations belong, incurred an operational loss of $311 million in 2008, despite the company's market share gains. In its fiscal year 2008, ending in March 2009, Sony incurred its largest operational loss in its history of $2.4 billion. Sharp incurred a net loss of $1.3 billion in fiscal 2008, ending March 2008, citing stagnant consumption, fierce competition and a surging Japanese yen.

"The struggle for growth during the economic downturn forced these OEMs to reduce their prices in order to increase sales and to maintain their market share," Wu said. "Consequently, contract manufacturers' growth potential and profitability were squeezed by their OEM customers."

TPV Technology Ltd. which long has been the largest LCD TV ODM, also suffered losses in 2008. At the beginning of 2008, the company projected that it would ship 7.5 million LCD TVs. But as the turmoil hit the consumer market, the company revised down its outlook for 2008 throughout the third and fourth quarters, and ended up shipping 6 million LCD TVs. TPV incurred a net loss of $31 million in Q4 08, compared to a net profit of $56.3 million in Q4 07. The company's full-year net profit for 2008 was $97.2 million, down 46 percent from 2007.


1???2?Next Page?Last Page



Article Comments - Analyst: LCD TV outsourcing falls sh...
Comments:??
*? You can enter [0] more charecters.
*Verify code:
?
?
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

?
?
Back to Top