The holiday-driven surge in orders for liquid-crystal display (LCD) panels from Chinese television brands was not sufficient to offset weakness during the rest of the second half of 2013, resulting in an annual decline in purchases, according to a new LCD Supply Chain TV Tracker report from IHS Inc.
Some 50.1 million LCD panels were estimated to have been snapped up by China’s Top 6 TV makers by the time 2013 ended—down 6 percent from 2012. Sluggish demand and poor exports were to blame for the decline in purchasing by the Chinese brands.
At least 5.4 million panels were bought in November, the latest time for which figures can be confirmed, and another 5.5 million units were estimated to have been acquired in December. Each of those last two months for 2013 outperformed the earlier months throughout the year in terms of sheer volume. In the end, however, the November and December tallies couldn’t overcome the deficit brought on by decreasing panel orders for the entire second half—the last two months of the year included.
The difference between expanding orders in the first half and an entirely opposite dynamic in the second revolved around the critical government rebates from Beijing for TVs, which ended in May. From then on, Chinese consumers lost an important piece of support and motivation for buying new televisions, which then impacted sales of the Chinese TV brands and influenced their panel-purchasing decisions.
Panel orders during the second half of 2013 contracted by 11 to 31 percent compared to their equivalent monthly periods in 2012. In comparison, LCD panel purchases during the first six months of 2013 rose by 8 to 37 percent, except for a 12 percent decline in February.
China is currently the world’s largest market for LCD TVs, so the market’s behavior there is closely monitored by the rest of the LCD TV space. China’s six major TV brands—Changhong, Hisense, Konka, Skyworth, TCL and Haier—all serve as important customers for Tier 1 LCD makers like Samsung Display and LG Display, as well as for lesser-known manufacturers based in Taiwan, such as AUO and Innolux. As Chinese brands calibrate their purchases, LCD manufacturers elsewhere respond in appropriate fashion by either ramping up or dialing down panel production.
New Year enters on a weak note
LCD panel purchases in January and February of 2014 are expected to drop even further compared to their year-ago levels, especially as TV demand declines after the Lunar New Year at the end of January.
With demand still below what panel makers hope to supply, panel prices are projected to continue their descent down for the near term.
LG hits a high; UHD panels score
Among LCD panel manufacturers, LG Display hit a high point in November, shipping 1.4 million units. The South Korean maker’s stable supply of panels and attractive pricing worked to its favor, causing demand for its products to rise during the year-end. Panel purchases by buyers like Skyworth, Konka and Changhong rose dramatically as 2013 came to a close.
Innolux and local Chinese panel maker CSOT also enjoyed heady orders as they offered big sales promos for buyers of their ultra-high-definition (UHD) panels. Although UHD panels made up only a miniscule 4 percent of the overall LCD panel market in China last year, price reductions during the second half made the panels highly attractive to Chinese TV brands.
By the second half of 2013, even global players like Samsung and LG had joined the bandwagon, offering UHD panels for the Chinese market.