China has come to establish a dominant position in the LCD TV panel industry, which also gives Chinese LCD panel suppliers substantial price-setting power. The said suppliers have raised prices by controlling operating rates despite sluggish end-market demand. This strategy, however, has engendered dissatisfaction among manufacturer brands, of which Samsung Electronics and LG Electronics have reduced their order volume to Chinese manufacturers and placed them with AU Optronics (AUO), Innolux, Sharp, and LG Display (LGD.)
Sources say that distributing channels have healthy levels of inventory after several adjustments. However, most brands maintain a cautiously optimistic outlook for demand in 2024, despite 2023's TV market slump. On the one hand, international sports events and holiday sales are expected to boost demand in the fourth quarter after the peak season. Yet, on the other hand, high inflation, the saturated market, the Russo-Ukrainian war, and the Israel-Hamas war add to uncertainties for future end-market demand.
Holiday sales refer to China's Singles' Day sales, Diwali sales in India, Black Friday sales, and Christmas sales. Upcoming sports events in 2024 are the 2024 Olympic Games, the UEFA European Football Championship, and Copa America. TV brands are optimistic about this subsequent demand, expecting strong panel procurement momentum.
Brand procurement plans
Most brands have set ambitious shipment goals, judging from their procurement plans for TV panels. According to AVC Revo, Samsung Electronics has confirmed its 2024 long-term agreement quantities with various panel manufacturers. The total is around 49 million units. The brand's purchase unit of LCD TV panels in 2023 is estimated to fall to under 33 million units.
Following the drop in LCD TV panel prices, Samsung's purchase volume is expected to recover in 2024. The firm's panel purchase from China is estimated to drop to under 50% while it increases its order volume to Taiwanese, Japanese, and Korean OEMs. The purchase share of OLED panels will increase as well. Samsung has revised its purchase volume downwards in the second half of this year multiple times, leading to a decrease in panel inventory levels.
Another brand trying to reduce its reliance on China is LG Electronics. The firm is expected to replace orders to Chinese suppliers with orders to AUO, Innolux, Sharp, and LGD. The brand plans to work with AUO on 55" and 43" TV panels and add 86" panels to its cooperation plan with Innolux. LCD TV panel purchases from LGD are estimated to resume to approximately 4 million units following internal group directives. The volume was 900,000 units this year.
Changes in LCD panel production
Notably, plans for the Chinese TV firm Skyworth Group to acquire LGD's Gen 8.5 LCD plant in Guangzhou have been halted. Sources had previously said that the group was considering the acquisition.
The TV panel supply dynamics and shipments are anticipated to change from LGD's almost doubled LCD panel production volume in 2024. LGD's Guangzhou plant is expected to increase its capacity by December. By the second quarter of 2024, its monthly capacity could likely return to 180,000 glass substrates.
Panel maker performance
Large-size panel makers are seeing a decline in revenue due to the off-season. Panel manufacturers have reduced operating rates in response to brands' downward purchase volume revision in the fourth quarter.
AUO's self-reported consolidated revenue in October was NT$21.17 billion (US$659.67 million), down 13.8% on-month; up 23.2% on-year. The total area of panels shipped in October was 1.617 million square meters, a 21.9% decrease on-month.
Innolux's self-reported consolidated revenue in October was NT$17.3 billion, down 13.2% on-month; up 10.7% on-year. Shipment volume of large-size panels in October was 8.26 million units, an 11.1% decrease on-month. For small and mid-size panels, the combined shipment volume in October was 20.81 million units, a 2.8% drop on-month.
Article translated by Julie Chang
