TV LCD panel prices continue to rise, a new round of price increases is about to begin

It is reported that with the continuous "rise" in the price of LCD panels, the two Korean panel giants LGD and Samsung Display (SDC) have successively announced the delay of the LCD panel production suspension plan, and Chinese manufacturers are also constantly increasing their production capacity.

It is learned that since June, TV LCD panels have been rising in price across the board, and the pace of price increases has not stopped. The price increase of small and medium-sized TV LCD panels has been the most rapid, with the price increase of 32-inch to 55-inch TV LCD panels exceeding 40%, of which the price of 55-inch has increased by a total of US$51, and the price increase of 32-inch has even exceeded 70%. Although the price increase of TV LCD panels above 65 inches is less than 30%, the price has still increased by more than US$30.

Faced with the pressure of rising TV LCD panel prices, TV manufacturers had to raise prices starting in September. Xiaomi, Hisense, Changhong, Konka, Skyworth, TCL Electronics and other TV manufacturers have raised TV sales prices to varying degrees. This has led to the average online price of TVs during the National Day holiday being more than 10% higher than the average price during June 18, with the average online price of 55-inch, 32-inch and 50-inch TVs increasing by more than 30%.

After the National Day, TV LCD panel prices rose again by more than 10% from September, with 32-inch panels rising by 22%, 34-inch to 55-inch panels rising by about 15%, and 65-inch and above panels rising by more than 5%. TCL Electronics, Hisense and other manufacturers were forced to raise TV prices again.

In November, the price of TV LCD panels has not stopped rising. Market research firm Avio reports that although the increase in TV LCD panel prices narrowed in November, it will still maintain an upward trend, and the price of 32-inch to 75-inch TV LCD panels will increase by between US$3 and US$8.

Strong downstream demand

This wave of TV LCD panel price increases is mainly driven by two downstream forces. Xie Minxia, ​​a senior analyst of TV whole machine research at Qunzhi Consulting, said that the continued strong demand in the overseas market and the domestic peak season stocking have caused the TV LCD panel prices to continue to rise.

The first force is the domestic market's stocking up for the peak season. In order to prepare for the National Day and Double 11 shopping festivals and seize market share, TV manufacturers have continued to increase their demand for TV LCD panels, leading to a continuous increase in LCD panel prices.

It is now the Double 11 promotion period, and TV manufacturers have already stuffed a large amount of stock into various channels. Channels such as Tmall, JD.com, Suning, and Gome have accumulated a large amount of inventory to cope with potential purchasing demand during the Double 11 promotion period.

Although TV manufacturers currently have some inventory, the inventory level is relatively low. If the sales performance of various channels is good during the Double 11 period, the inventory level will remain low. At that time, TV manufacturers may continue to purchase a large number of TV LCD panels in order to reduce losses.

The second force is the recovery of overseas markets. Since the second half of the year, the overseas TV market has gradually recovered, especially under the stimulation of positive consumption policies, the overseas TV market has risen instead of falling. In particular, the retail volume of the TV market in North America in September increased by 35% year-on-year, exceeding market expectations.

Some of the inventory originally prepared for Black Friday and Christmas in the fourth quarter was consumed in advance, keeping the inventory of overseas channels at a low level, and TV manufacturers raised their expectations for the overseas market. After entering November, the traditional peak season overseas is about to arrive, and overseas channels need to speed up the stocking speed to prevent the phenomenon of supply exceeding demand, so that the price of TV LCD panels will continue to rise.

Upstream material price increases

In addition to being driven by downstream demand, the price increase of TV LCD panels is also driven by the price increase of upstream materials.

Last year, the price of TV LCD panels hit a low point, and upstream manufacturers were forced to continuously lower the selling prices of materials, which accelerated the elimination of upstream manufacturers, some of which have already closed down.

Since the second half of this year, the TV LCD panel market has improved, but the remaining upstream manufacturers' production capacity can no longer meet the short-term expansion of midstream panel manufacturers' demand, and upstream manufacturers have also begun to raise prices. A panel manufacturer's purchasing staff revealed to Jiwei.com reporters that upstream manufacturers are not like panel manufacturers who directly call for price increases. They call for material shortages, and then each time the price increases by 10%.

Driver ICs, T-COM chips, PCBs and other components used in TV LCD panels are even out of stock. An industry insider said that 5G mobile phones have become a popular trend this year, and the demand for chips required for 5G mobile phones is strong, especially the iPhone 12 series fully supports 5G, allowing wafer foundries to prioritize more production capacity for more profitable 5G mobile phone IC components, while IC components used in TV LCD panels with lower profits have been neglected, resulting in a phenomenon of supply exceeding demand, and some panel manufacturers have no IC supply.

The shortage of some materials has limited the supply of TV LCD panels in the market, becoming an important driving force behind the continuous price increase of TV LCD panels. An industry insider pointed out that the global monthly sales of LCD TVs are less than 20 million units. If each panel factory reduces hundreds of K of materials every month, the global monthly production capacity of TV LCD panels may be reduced by millions of pieces, and the market supply and demand will be unbalanced, and the price of TV LCD panels will naturally rise.

How long will the price increase last?

With material shortages upstream and strong demand downstream, when will this wave of price increases for TV LCD panels stop?

The price fluctuations of TV LCD panels have certain periodicity and regularity. The price increase trend of TV LCD panels this year is somewhat similar to that in 2016. In 2016, TV LCD panels also started to increase in price from the third quarter, and that wave of price increases lasted for three quarters. This wave of price increases this year is likely to continue until the first quarter of next year, just like in 2016.

However, since this wave of price increases is somewhat different from the one in 2016 and is mixed with more uncertainties, different manufacturers or research institutions have different views on when this wave of price increases will stop. Liu Jiansheng, a senior analyst at Qunzhi Consulting's TV panel research, believes that the current large-size panel prices are still hot and the price increase trend may extend to the end of the year. The Dixian Consulting report pointed out that the delay of SDC and LGD's withdrawal from the LCD panel market will accelerate the arrival of the turning point of TV panel prices, and the price turning point may be brought forward from the original second quarter to the first quarter. AUO Chairman Peng Shuanglang said that the fourth quarter still looks good, the industry's prosperity continues to rise, and the hot situation may even continue to the first half of next year.

There are three main factors that really affect the time when the TV LCD panel price surge stops. The first factor is the upstream supply, the second factor is the shutdown of the midstream, and the third factor is the downstream demand. Any change in these three factors may affect the price of TV LCD panels. What is more certain now is that the shutdown time of the midstream has been delayed, which will bring forward the time when the TV LCD panel price surge stops, but the downstream demand and upstream supply are still full of uncertainty. If Double 11 and overseas sales go smoothly, the price of TV LCD panels will continue to rise, otherwise, the turning point of the price of TV LCD panels may be advanced. The degree of material shortage will also affect the balance of supply and demand.

Regardless of the price trend of TV LCD panels, it is unlikely that the price of TV LCD panels will continue to fall next year as it did in the second half of last year. Bian Zheng, deputy director of research at Aworev, pointed out that the supply and demand of TV LCD panels is in a tight state or tending to be balanced, and the price may not fall sharply before the fourth quarter of next year.