COVID-19 or not, pricing on LCD panels used for TVs have been on an upswing this summer with demand for 55- and 32-inch sizes climbing about 10%, positively impacting profitability of panel makers and eating into margins of TV manufacturers heading into the holidays. But this is probably not going to be noticed at the retail cash register, due to a market share war among the big TV brands.
That’s according to data released this week by TV panel market analyst TrendForce, which has observed declining TV panel prices for seven straight quarters, but now sees profitability returning to most panel Fabs in the third quarter of 2020. These panel suppliers have been adjusting to a panel oversupply situation caused by the opening of new LCD factories in China and elsewhere in Asia in recent quarters.
But with COVID-19 and production cutbacks, the oversupply situation has slowly changed to shortages in some key TV screen size segments.
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TrendForce now sees panel makers enjoying improved profitability for the third quarter of the year as TV makers aggressively stock up on panel components in a bid to win TV market share. In fact, most panel suppliers are predicted to see a return to profitability in August or September after successive quarterly losses.
TrendForce said panel makers are now calling the shots, with 55-inch and 32-inch screen sizes, both made in so-called Gen 8.5 (a measure of mother glass size from which panels are cut) Fabs, seeing the highest price increases in August 2020. Strong demand has also started impacting 43-inch panels, the report shows, and all three panel sizes are now expected to register 10% price hikes by the end of this month.
As for other popular panel sizes, 50-inch, 65-inch, and 75-inch panels should receive price hikes of between 8-10%, 5-7% and 1-2%, respectively, according to TrendForce.
Contributing factors include: TV makers stepping up panel acquistions through October in preparation for the seasonally strong second half, while leading brands including Samsung, TCL and Hisense have each executed strategies aimed at building competitive advantages to take market share from other brands. This strategy has involved aggressively stepping up TV unit shipments a lowering prices to win the point of sale.
In the process, TrendForce said panel capacities have been tight, enabling panel suppliers to raise TV panel prices with minimal risk of being stuck with unsold inventory. This is allowing panel production to continue to rise, and along with it panel pricing, at a slow and steady rate.
TrendForce calls for an 11% glut ratio between panel suppliers and purchasers in the third quarter of 2020, which is below the average of 20% and also the lowest quarterly glut ratio since the start of 2017.
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By Greg Tarr
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