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Falling TV sales worsen panel oversupply

Posted: 30 Jul 2013 ?? ?Print Version ?Bookmark and Share

Keywords:TV? LCD? panel oversupply?

According to a recent report from IHS, suppliers of large-sized LCD panels are facing weak demand growth in Q3, aggravating the glut plaguing the market. This is despite the expected seasonal high when sales should be rising sharply. Measured in terms of square meters, supply of large-sized LCDs is seen to surpass demand by 15.9 per cent during the period from July through September, up by about three percentage points from the previous forecast of a 13.2 per cent oversupply, stated the market research firm.

While the glut will decline compared to Q2as is normal during the pre-holiday seasonthe surplus remains at elevated levels.

"This is the time of the year when LCD panel makers usually are ramping up production to meet holiday demand for televisions, notebook PCs, tablets and other consumer-oriented electronics," said Ricky Park, senior manager for large-area displays at IHS. "However, the display industry is confronting the prospect of weak sales growth and a lack of visibility into future demand trends. With a combination of flagging economic conditions and the end of a popular TV incentive plan in China, large-sized LCD panel supply is expected to overshoot demand by a higher margin than previously predicted."

IHS defines large-sized LCDs as panels that have a diagonal dimension of 7in or greater used in devices such as televisions, notebook PCs and monitors.

Global large-sized LCD panel demand in terms of square meters is expected to rise by a tepid six per cent in Q3 compared to Q2. In most years, growth is typically larger because of seasonal factors. Expansion in 2012, for instance, was in double-digit territory at more than 10 per cent.

Meanwhile, production capacity utilisation among large-sized LCD makers is on the rise, increasing to 84 per cent in Q3, up from 79 per cent in Q2.

The combination of the weaker-than-normal increase in demand and the significant expansion in utilisation will combine to inflate the excess supply to higher levels.

For their part, Chinese TV makers are experiencing swelling inventories because of weaker-than-expected sales. The companies are likely to reduce their sales targets for 2013 and are trimming panel orders for H2.

Although China continues to enjoy the strongest economic growth among the major world economies, signs of weakness abound as export growth has declined sharply, due to a stagnant global economic recovery, a stronger yuan, and the Chinese government's efforts to stem currency speculation. Given the deterioration of its export industry and the sluggish global economy, China can no longer depend on exports to fuel its overall economic growth.

Furthermore, the Chinese government has terminated its subsidy program for energy-saving TVs that had been driving sales earlier this year. This will further reduce panel demand.

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