Adjustment Strategies for Product Mixes and Capacities Effectively Triggered TV Panel Price to Rise in July-Ameya360 electronic components purchasing network

Adjustment Strategies for Product Mixes and Capacities Effectively Triggered TV Panel Price to Rise in July

Release time：2018-07-06

author：Ameya360

source：TrendForce

reading：1108

According to the latest statistics of WitsView, a division of TrendForce, after TV panel price significantly dropped in 2Q18, panel makers aggressively adjusted product mixes and conducted annual maintenance. Then, because of decreased supply and peak season, 32" panel price is predicted to rise in July. Some large-sized panel price might stay flat or even slightly move up from June.

Because Chinese panel makers' capacities continued expanding, in 2018, large-sized panel glass input by area is projected to grow 8.7% YoY. In 2018, there are three newly-added fabs, including BOE's Gen 10.5 fab in Hefei, the Gen 8.6 fab of CEC-CHOT, and CEC-Panda Chengdu's Gen 8.6+ fab. They all reached mass production phases in 1H18, during off seasons. Besides, these new capacities are totally used to make TV products. Thus, TV panel price rapidly fell. Particularly, 65" panel price fall scale was remarkable in March. 32" panel price dropped more than US$10 within two months (April and May).

Anita Wang, a senior research manager of WitsView, pointed out, various panel makers took different actions, to tackle the sudden TV panel price fall. For Innolux, AUO and LG Display (LGD), they all modified product mixes of Gen 6 fabs in 1Q18, dropped the glass input of 65" TV panels, and increased small-sized TV panel's input or LCD monitor panel's input. As for BOE and CSOT, they reduced glass input for the 32", and increased input of larger-sized TV products. Regarding CSOT and Samsung Display (SDC), each of them conducted annual maintenance in March and in April, respectively.

For 32" panel price, it stopped falling in July. In particular, some panel makers proactively asked for more than US$3 rise in July for four reasons below. First, 32" panel supply decreased. Next, panel makers have cleared its inventory in April and May. Third, short-term rush orders surfaced. Fourth, a peak season is coming, so some panel makers began to slow down the price downtrend.

Each panel segment's price trend tightly links to one another's. Thus, after 32" panel price started to increase, 40"~43" panel price might stay flat or even slightly rise. In view of 55" panel price, it is expected to remain constant in August after the peak season's stocking-up demand develops and mid-and-small-sized panel price rebounds.

The stocking-up demand surfaced, so in June, some IT panel price stayed unchanged

Speaking of LCD monitor price, small-sized TN panel price didn't change much in June because of the supply shortage for driver IC and passive components, and the strike of AUO's fab in Songjiang, Shanghai.

When it comes to LCD monitor IPS panel price, on the one hand, brands' borderless panel demand has been currently well. Particularly, 23.8" demand considerably shifted from general border panel to the borderless. On the other hand, panel makers' current borderless panel capacity has been limited, so their supply intensified. Combination of the two reasons above led to 23.8" borderless panel price stop dropping in June.

With regard to the NB panel price, mostly because of the lasting shortage issue of driver IC, the majority of NB brands procured panels ahead of time in June, in order to prepare for the coming peak season. Accordingly, most of NB panel prices have been flat in June.

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Trade news

Global TV Panel Shipment Grew by 9.1% Monthly in May, BOE Surpassed LGD and Ranked the First

According to the latest report by WitsView, a division of TrendForce, global TV panel shipments reached 23.52 million in May, a 9.1% growth over the previous month. Although branded TV makers have purchased fewer panels since 2Q18 in order to adjust their inventory levels, the panel makers still have high utilization rates. In the situation, they planned special deal projects to increase the shipments, which would probably further lower the panel prices.The panel shipments have shown some improvements in June. “The TV set retail prices in Chinese 618 mid-season sales have been 20% lower than in 315 sales”, says Iris Hu, the research manager of WitsView, “which may stimulate the channel sales and consume inventories.” Going forward to the end of 2Q, TV panel prices have approached the cash costs. TV brands are expected to stock up panels in advance, on considering the limited room for further price decline. “Therefore, we expect the TV panel shipments in June to be roughly the same as May.BOE returned to the top of shipment ranking thanks to special deal projects, Innolux ranked the second with 42.5 % monthly growthBOE has adjusted the product mixes of its Gen 8.5 fab, increasing the share of 55-inch panels, of which the shipment reached a record high of 590,000 pieces. In terms of small size products, BOE has shipped all 600,000 pieces of 32-inch panels in the inventory at special deal prices, and the total shipments of this size reached 2.578 million pieces, a growth of 30.2% over last month. In total, BOE shipped 4.774 million pieces of TV panels in May, a monthly growth of 19%. This is a new high record of BOE’s shipments, bringing the company back to the top of shipment ranking.Innolux recorded relatively low shipments in April due to poor demand, ending up with high inventory level for 39.5-inch and 50-inch panels. Similar to BOE, Innolux also provided special deal projects, consuming nearly 40% of 39.5-inch panels’ inventory. Its shipments for 39.5-inch panels increased significantly by 136% to 1.37 million pieces in May. In total, Innolux shipped 3.817 million pieces of TV panels, a growth of 42.5% month-on-month. With the highest shipment growth among the six major panel makers, Innolux returned to the second place in the ranking.Panel price drop has reduced the customers’ willingness to stock up, LDG’s shipments decreased by 7% monthly in MayLDG has also been influenced by the panel price drop starting from 2Q18, which lowered the customers’ willingness to stock up. As the result, the shipments of LGD have been decreasing for two consecutive months. The mainstream size, 43-65-inch products recorded a shipment decline of 9.4%. On the whole, LDG shipped 3.643 million pieces of TV panels in May, a decrease of 7% compared with previous month. The decline appeared to be the steepest among the six major panel makers.CSOT, one of the major suppliers of 32-inch panels, has adjusted the product mixes to reduce the risks of stocking up 32-inch products. The shipments of 43-inch and 49-inch products grew by 38.8% and 21.1% compared with last month. Yet in total, the monthly shipments of CSOT for all sizes still declined by 3.1% to 3.241 million pieces.Samsung Display (SDC) started its annual maintenance of Korean fab in April amid the weak demand in Q2, resulting in low production volume and shipments in April and May. In June, SDC shipped 400,000 pieces of 65-inch panels thanks to its production scale and cost advantages. For all size, SDC shipped 3.15 million pieces in May, a 2.8% increase over the last month.AUO's TV panel shipments recorded 2.005 million pieces in May, a monthly decline of 1.1%. This was mainly attributed to the customers’ lower willingness to stock up because of the overall poor demand and the continued drop in panel prices. The shipments of 50-inch and 55-inch panels declined by 6.3% and 7.8% respectively.

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