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2020/09/21
Display panel prices exhibited a remarkable QoQ increase in 3Q20, a rare occurrence in recent years, according to TrendForce’s latest investigations In particular, prices for NB (notebook computer) panels increased by 5-10% QoQ during the quarter, while the corresponding increase in TV panel prices reached above 30% Since the supply of large-sized panels is expected to exceed demand by a mere 02% in 4Q20, the shortage situation for certain panel applications is expected to persist, meaning panel prices may potentially increase by as much as 10% QoQ in 4Q20
TrendForce Research Vice President Eric Chiou believes that TV panel quotes may remain at a peak level after continuously rising in 4Q20, primarily because the currently stable state of slightly tight supply is yet to be disrupted Due to persistently high demand for IT panels, panel makers are yet to transition their production capacity from IT panels to TV panels on a large scale in the short run even though TV panels have been seeing a noticeable rise in both quotes and profitability At the same time, the supply of TV panels has become somewhat constrained due to factors such as the shuttering of SDC’s panel manufacturing operations and the slight shortage in Gen 105 glass sheets In light of these supply-side limitations, the global supply of TV panels is expected to decrease by 38% QoQ in 4Q20
On the other hand, the most pressing concern on the demand-side of the market is whether TV brands will be forced to raise prices on their TV sets after TV panels undergo a significant price hike The upturn in TV prices will likely hamper the sales performance of TV sets Notably, channel distributors and TV brands have negotiated to suppress the upturn in TV prices until possibly early 2021 in the North American market, which is the market with the most remarkable sales performance globally this year If retail pricing proceeds as negotiated, then the deferred price hike in TV sets, as opposed to an immediate price hike, will have less of an impact on TV panel demand in the short run Although TV panel prices have now returned to their level from nearly two years ago, they may still increase by about 10% QoQ in 4Q20 due to the interaction of such factors as panel capacity allocation on the supply side and market uncertainties on the demand side
With regards to the various IT panels, demand for NB panels remains high More specifically, the shortage of 116-inch panels, which are highly correlated with Chromebooks, is unlikely to be fully resolved As such, the 2-4% MoM increase in 116-inch panel prices is expected to persist until 4Q20 On the other hand, the overall demand for desktop monitor panels falls short of the demand for NB panels, but the tight supply of gaming monitors and curved monitors is expected to result in either unchanged prices or a slight QoQ increase for desktop monitor panels in 4Q20
2020/08/20
TV panel prices have been maintaining their upswing in August, with 55-inch panels and 32-inch panels each registering price hikes of about 10%, according to TrendForce’s latest investigations IT panel prices have also been gradually rising, thanks to stable demand from end-markets Most panel manufacturers are thus expected to make a rebound out of the seven consecutive quarterly losses they had previously suffered and finally turn a profit, in either August or September As such, the panel industry is projected to make a significant improvement in terms of profitability in 3Q20
TrendForce Research Vice President Eric Chiou indicates that TV panel quotes are almost entirely dictated by panel manufacturers at the moment In particular, 55-inch panels and 32-inch panels, which are both made in Gen 85 fabs, have been the star performers among various panel sizes by posting the highest price hikes in August As well, given the strong demand for 43-inch panels, all three panel sizes are projected to register price hikes of about 10% in August Other panel sizes, namely 50-inch, 65-inch, and 75-inch panels, are expected to record price hikes of 8-10%, 5-7%, and 1-2%, respectively
TV panel shortage is projected to intensify in 3Q20 as TV brands aggressively stock up in anticipation of capturing TV market share
While the shortage of TV panels has resulted in the recent surge in panel prices in 3Q20, the demand for panels can be attributed to two factors First, almost all TV brands have been stepping up their panel procurement efforts to prepare for increased retail sales in 2H20; this procurement momentum is projected to last until October Second, leading TV brands, including Samsung, TCL, and Hisense, have been increasingly favoring the strategy of obtaining competitive advantages by expanding their market shares This strategy involves a more aggressive shipment of TVs in order to cannibalize competitors’ market shares, further contributing to the overall procurement momentum of TV panels
With regards to the supply side of the panel industry, because of the consistently high demand for IT panels, manufacturers’ panel capacities have been remaining relatively tight, meaning panel manufacturers may raise TV panel prices as much as possible without worrying about having to digest possible excess capacity Such a market condition essentially allows manufacturers to raise panel quotes while increasing production levels at an extremely slow and gradual pace Based on long-term shipment data compiled on TV panels and TV units, TrendForce forecasts an 11% glut ratio between panel suppliers and purchasers in 3Q20, a far lower figure than the average of 20% and also the lowest quarterly glut ratio since the start of 2017 This 11% ratio accurately indicates the fact that panel prices made a rebound from rock bottom due to the overall shortage of panels
In terms of IT products, monitor panel prices have generally been trending flat or even rising by a small amount However, high demand in the consumer markets, as well as SDC’s impending exit from the LCD panel manufacturing business at the end of 2020, has resulted in a minor 4-8% rebound for curved monitor open cell quotes in August, the most significant price movement among all monitor product types On the other hand, NB (notebook computer) panel prices are currently maintaining a slow uptrend of about 1-3% in August thanks to rising demand from WFH and distance education generated by the COVID-19 pandemic
2020/07/06
According to the latest investigations by TrendForce’s Department of Display Research, the market demand for display panels has been surging in recent months In particular, after the 2Q20 period of sluggish purchasing momentum as a result of the COVID-19 pandemic, the TV panel market has seen its demand rebound quickly, in turn resulting in a higher-than-expected spike in TV panel quotes in July Other than 75-inch panels, prices for all sizes of TV panels are likely to go into a noticeable uptrend in July, with a projected 8-10% MoM increase in 32-inch and 55-inch panels Prices for 43-inch, 50-inch, and 65-inch panels, which are panel sizes with equally strong demand momentum, are expected to see average hikes of 6-8%, resulting in a rarely seen bull market for the display panel industry in recent years
TrendForce Research Vice President Eric Chiou indicates that, given the overall growth in the panel market, the price differences that exist among the different panel suppliers and purchasers are worth investigating First, the differences in panel quotes from panel suppliers exist mainly due to the supply dominance of BOE and TCL CSOT, following Korean manufacturers’ exit from the LCD manufacturing business BOE and TCL CSOT now hold increased influence over panel prices, including the magnitude of price hikes With regards to the purchasing end, more specifically the four major brands including Samsung, LGE, TCL, and Hisense, Chinese brands are far more ambitious than their Korean counterparts in expanding market share overseas and therefore exhibit much higher stock-up demand As such, Chinese brands are more accepting of rising panel prices relative to their competitors Given the return of consumer confidence, as well as the TV brands’ sales promotions following the pandemic’s gradual slowdown, the demand for TV panels is likely to remain strong in 3Q20, but the large-scale price hikes in panel quotes will lead to decreased profitability for TV brands, in turn potentially becoming the greatest impediment against the sustained rise in panel prices in the future
According to TrendForce, although the demand for IT panels is not as strong as TV panel demand, the IT panel market is expected to seek highpoints amidst a consistent performance The notebook computer market has benefitted from increased WFH and distance education applications since the onset of COVID-19 As the school season commences and consumer confidence returns in 3Q20, the overall demand for notebook computers is expected to remain strong, in turn leading to a potential 1-2% increase in notebook panel prices in July Finally, although some rumors have surfaced in the monitor panel industry regarding demand adjustments, quotes for monitor panels this month are expected to trend flat from last month, supported by manufacturers’ production capacity for TV panels
2019/06/04
As worries spring up in the market about whether the 25% tariff arising from the US-China trade war would impact TV markets, US President Trump has further announced on May 30 that he plans to levy a 5% tariff on Mexico's imports to the US on June 10 due to illegal immigrant issues The tax will keep escalating and hit 25% in October WitsView , a division of TrendForce , suggests that the tariff problems to follow may severely impact US market confidence and drag down global TV shipments for 2019
“Mexico has always formed the bases of assembly for many consumer electronics in the US, including TVs, due to being conveniently well-located and the tariff benefits from the USMCA,” says Eric Chiou, research vice president at TrendForce 2018, for example , saw Mexico producing around half of all TV products sold in the US-led North American TV market, while the other half came from China It is exactly due to Mexico's buffering role that worries over the trade war impact on TV markets were not as intense as over its impact on notebook PCs and smartphones, as the latter two are lacking in production dispatching flexibility
Korean and Japanese Brands' Large Mexican Capacity to Become an Underlying Concern If the US Imposes Tariffs on Mexico
According to TrendForce's investigations, the seven major TV brands in the North American market are Samsung, Vizio, TCL, LG, Hisense, Funai and Sony, which collectively make up 85% of the total market The effects felt from the trade war vary depending on production bases and operating models Vizio is highly reliant on partnering China OEMs in production, and is thus seen as the brand to be hit by the first wave of the US-China tariff war And although TCL and Hisense, two fast rising companies in North American markets, have capacities in Mexico available for regulation, their heavy dependencies on Chinese manufacturing leave their highly prized cost and price advantages vulnerable to levied tariffs by the US and China
In comparison, Samsung, LG, Sony and other global brands who possess large amounts of TV assembly capacity in Mexico were not only able to return unscathed from this trade war, but even become beneficiaries from the misfortune of competitors suffering elevated costs However, once Mexico's imports come under tax-siege, Mexican TV capacity will immediately become quite the hot potatoes for global TV brands
North American Market Forms a Fifth of Global Shipments; Diminishing TV Demand to Exacerbate the Panel Oversupply
Production dispatching routes for TV brands were virtually severed by the exposure of two countries to the imposed tariffs: first China, then Mexico Not only is this a US TV market disaster in the making, but it would also hurt the future TV market The US-led North American market contributes to 20% of global TV shipments, and is also one of the main sales region for extra-large screens 65 inches and above Raised costs derived from tariff issues may immediately prove detrimental to sales promotions in 2H, perhaps even causing US market sales momentum to come to a screeching halt Apart from impacting TV shipment scale, there may also be rising concerns over a slowing expansion in TV sizes, which will form an additional woe for the panel industry, which is already stuck in a vicious oversupply cycle
The tariffs imposed by the US on Mexico is scheduled to climb by the month up until October TrendForce analyzes that TV brands may soften the impact by stocking up ahead of time, injecting a bit of momentum into the panel industry by bringing up TV panel demand momentarily Yet if towering tariffs become the norm, the affordable TV market that Americans have grown accustomed to may become something of the past, and dwindling demand may haunt the market in the future If this happens, it will definitely impact brands' panel procurement needs, and panel suppliers in Korea, Taiwan or China will find it difficult to emerge from the ordeal in one piece Of course, whether the Mexican government may take effective measures to control illegal immigrants and win the trust of the Trump administration is also key to solving the US-Mexico tariff dispute
2019/05/14
May 10 th sees the US-China trade dispute escalating yet again as the US continues to hike tariffs on US$200 billion worth of Chinese imports, going from 10% to 25% TrendForce points out that TVs , monitors, notebooks and other display products were not among the US$250 billion worth of goods hit by the 25% tariffs, thus the current impact on panels and the display industry remains to be fairly limited
Yet tensions amid the US-China trade war has intensified China has swiftly responded in retaliation, imposing 5%-25% punitive tariffs of its own on US$60 billion worth of goods on May 13th, Taipei Time Likewise, the US has released its 4th list of tariffs, including US$325 billion worth of China exports among the items to suffer 25% tariffs Notebooks, which make up a sizeable proportion of imports in revenue, are especially deserving of close attention
The significance of notebook PCs lies in 3 areas, and one should note that not only are the US and China both harmed by the high tariffs, but Taiwan is also caught up in the storm First of all, nearly 90% of notebook PCs imported to the US are assembled in China, with Chongqing as its main industrial city for these products Lacking other production bases of similar scale with highly integrated supply chains for flexible procurement, China will suffer a terrible hit in exports should punitive tariffs begin to fly
Secondly, the North American notebook PC market is highly reliant on domestic brands in the US According to TrendForce's global shipment statistics for notebook PC brands 2018, American brands HP, Dell and Apple's market shares combined comprised up to 66% of the entire North American market Looking at it from another angle, shipments for the North American market took up 40~50% of total shipments and formed the main source of business for each of the three giants If tariffs are imposed on notebook PCs, American brands will begin to lose competitive power due to elevated costs from tariffs, impacting both business and profits If the tariffs reflect themselves in the end prices for notebook PCs, then there will be good reason to worry whether the North American market, which comprises up to a third of global notebook PC shipments,will suffer from a stifled sales momentum Should that come to pass, it shall be mayday for both American notebook PC brands and the global notebook market
Lastly, Taiwan's suppliers have long accumulated competitive power in and concentrated on notebook PC manufacturing The three aforementioned American brands all depend 90% on Taiwan's suppliers If punitive tariffs become unavoidable, Quanta, Compal and Wistron may become another center of impact in this disaster Some notebook PC ODMs have expanded their production capacities in Vietnam, Taiwan and other locations outside China since 2018 in an attempt to minimize the potential impacts from tariffs Although the change in places of production may circumvent the tariffs, notebook PC supply chains have long been situated in China Shipping the relevant upstream components to new plants overseas of China will incur additional fees and time costs, thus leading to an inevitable overall increase in cost despite the tariff work-around
TV Brands to Reshuffle by Market Share and Scale if Tariffs Hit Hard
In TV markets, having TVs made in Mexico and shipped to America for sale have always been the business model for years under considerations of tariff-related incentives and logistic costs Taking the current top four TV brands by market share for example, we see that Samsung and LG have enormous production capacities in Mexico, allowing the two Korean manufacturers to circumvent the towering tariffs on China imports with ease, thanks to the additional resources at hand
In contrast, Chinese brand TCL, catapulted by sharp price strategies, and Vizio are still highly reliant on China manufacturers for production Although TCL possesses some capacity in Mexico, it is only enough for 50% of US demand That is to say, once TVs are included in the list of products to suffer punitive tariffs, a reshuffling of brands by brand strength and market shares shall ensue
