Prices on LCD TVs in certain screen sizes could come down more noticeably this year as open cell panel suppliers, primarily in China and South Korea, continue to adjust down production volumes amidst building inventory rather than give in to pressure from TV makers to drop prices too close to cost.

David Hsieh, senior director of display research for IHS, said major LCD open cell panel producers from China, and to a lesser degree South Korea, are seeing pressure to reduce prices, and will need to reduce capacity utilization through the second quarter of 2018.

For perspective, global television sales were soft through much of 2017 due to panel shortages in certain screen sizes, which kept prices on finished TVs stable much of the year, presenting less opportunity for aggressive price promotion.

Hsieh said Korean panel makers expect more panel price pressure in the fourth quarter of 2018 due to new capacity coming online from BOE’s 10.5 Gen fab (producing mainly 65-inch 4K panels), the end of the traditional sports season in most parts of the world, and TV makers adjusting inventories and capacity utilization after comparatively stable panel prices in the second and third quarters.

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Hsieh warned that continuous oversupply conditions are likely in those periods, where panel makers did not reduce capacity utilization. As a result, high inventory is present in open cell panel screen sizes of 40, 50, 60, 70, and 65 inches. This is intensifying pressure from TV makers to reduce open cell prices, particularly during the spring.

An open cell panel, is the part of an LCD minus the backlight. Due to the price of finished LCD TVs declining as at a faster rate than the of the panels alone, the industry in recent years has turned more and more to producing open cell panels to reduce the cost to TV makers, and to enable thinner panel depths.

“Some TV makers still expect panel prices to fall below last cycle’s low,” Hsieh wrote. “Panel makers cannot agree to these prices now or in the near-term.”

He added they may be more willing to do so toward the end of the second quarter, but “when panel prices increase, a rebound is possible,” he added.

Meanwhile, TV makers, particularly in China, are feeling pressure to lower prices as a result of slower demand for TVs contributing to larger inventories in the first quarter of 2018.

“TV makers are holding enough inventory to get better bargains from panel suppliers, but some are bluffing to get price concessions,” Hsieh revealed. “Some TV makers may resume panel purchasing or inventory additions when they sense panel prices are at a low.”

Hsieh said TV panel demand is not bad for Korean panel makers. “LG Display expects TV panel demand to continue at 4.2 4.3 million per month in Q2, and Samsung Display expects it to be over 2.0 million per month in that quarter. The issue for Korean panel makers is not demand; it is that panel prices will inevitably fall due to market trends and special promotions from some Chinese and Taiwanese panel makers.”

For greater detail on individual suppliers read more here.


By Greg Tarr


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