TV panel oversupply and falling prices are leading China TV makers Hisense, TCL, Skyworth, Haier, Changhong and Konka to be more conservative in their panel purchasing plans, according to a new report from IHS.
The top six TV vendors in China plan to purchase just 14.8 million LCD TV panels, including open cell and modules, in the fourth quarter of 2015, which is a 16% on-year decline from the 17.7 million displays shipped in the fourth quarter of 2014.
As LG Display, Samsung Display, BOE, China Star Optoelectronics Technology (CSOT), AU Optronics (AUO) and Innolux are heavily invested in the China market, the slowdown is expected to cause these panel makers to adjust their capacity utilization still further in 2015.
"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 over-supply 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 China vendors, leading to a strong 15% on-year growth. However, in the third quarter, China TV vendors drastically reduced planned panel purchases. Manufacturers shipped 15 million TV panels to China in third-quarter 2015, which is a 6% on-year decline, with additional declines expected in the fourth quarter of 2015. According to IHS, the annual purchase of China's top six leading TV vendors will reach just 59.3 million in 2015, an on-year decline of less than 1% since 2014.
The leading panel suppliers for the China market in the third quarter of 2015 are: LG Display at 22%, CSOT at 20%, Innolux at 16%, Samsung Display at 15%, AUO at 13% and BOE at 10%. "These panel makers must now adjust their capacity and production strategy, which will make the market down-turn more severe by year's end," Jiang said.
At the end of August 2015, the average inventory level at the top six China TV brands reached 6.5 weeks, an on-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 China domestic market, inventory levels remained high in September. Amid lingering concerns over a panel supply shortage, China 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 of 2015."China's top six TV makers' purchases in the second quarter of 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 the third and fourth quarters of 2015."
Article translated by Alex Wolfgram
