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Sharp demand drop in China hits LCD TV panel makers

Posted: 13 Oct 2015 ?? ?Print Version ?Bookmark and Share

Keywords:LCD? TV panel? display? open cell?

The top six TV makers in China are cutting their TV panel purchases in response to oversupply and falling prices, according to market research firm IHS.

Hisense, TCL, Skyworth, Haier Changhong and Konka, plan to buy 14.8 million LCD TV panels, including open cell and modules, in the fourth quarter of 2015. This results in a 16 per cent drop from 17.7 million display shipments in the same period last year.

As LG Display, Samsung Display, BOE, ChinaStar, AUO and Innolux are heavily invested in the Chinese market, the slowdown is expected to cause these panel manufacturers to adjust their capacity utilisation still further this year.

"China is the largest global TV market, and this panel inventory adjustment and stagnant sell-through have caused TV makers in China to become more conservative in their panel purchases," said Nick Jiang, senior display analyst for IHS. "This conservatism is a major shift from the aggressive market in 2014, which has caused display makers to face oversupply and may induce panel prices to drop further at the end of this year."

In the first half of 2015, panel makers shipped 29.4 million TV panels to Chinese manufacturers, leading to a strong 15 per cent year-over-year growth. However, in the third quarter, Chinese TV makers drastically reduced planned panel purchases. Manufacturers shipped 15 million TV panels to China in Q3 2015, which is a six per cent year-over-year decline, with additional declines expected in Q4 2015.

According to the latest TV Display Supply Chain TrackerChina from IHS Technology,the annual purchase of China's top six TV makers will reach just 59.3 million this year, a year-over-year decline of less than one per cent since 2014.

Purchase plan

The leading panel suppliers for the Chinese market in Q3 2015 are LG Display at 22 per cent, ChinaStar at 20 per cent, Innolux at 16 per cent, Samsung Display at 15 per cent, AUO at 13 per cent and BOE at 10 per cent.

"These panel makers must now adjust their capacity and production strategy, which will make the market downturn more severe by year's end," Jiang said.

At the end of August 2015, the average inventory level at the top six Chinese TV brands reached 6.5 weeks, a month-over-month increase of one inventory week. To prepare for National Day, China's top six TV makers bought more panels in August; however, due to weakening demand in the Chinese domestic market, inventory levels remained high in September. Amid lingering concerns over a panel supply shortage, Chinese set makers' inventory levels returned to normal at the end of 2014, and this strong appetite for TV panels lifted overall panel purchases in the first quarter (Q1) of 2015.

"China's top six TV makers' purchases in Q2 2015 exceeded our expectations," Jiang said, "but with the advent of the off-season, inventory is also on the rise, so there is pressure for further panel price reductions in Q3 and Q4 of this year."

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