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Press Release

TrendForce Expects Quotes for TV Panels to Remain Fairly Stable During Second Quarter but Price Negotiations in Medium-Size Range Will Become Noisier

Tuesday , 05 / 09 / 2017 [ Analysts: TrendForce ]

Though major LCD panel makers have reported strong earnings for the first quarter of 2017, there are concerns within the panel market that the general price increase across panel products has reached in its peak and this trend may start to turn in the near term. The latest analysis from WitsView, a division of TrendForce, indicates that TV panel quotes on the whole will stay relatively stable in the second quarter, with the exception being noisy price negotiations in the medium-size range or sizes 40 to 43 inches. As for prices for panels used in other applications, quotes for monitor panels are on a gradual monthly slide due the off-season effect. Meanwhile, quotes for notebook panels are also relatively stable this second quarter due to returning demand resulting from earlier purchase adjustments made by notebook brands.

In the TV panel market, WitsView points to four major indicating factors that will influence the supply-demand situations and prices in the second quarter. Three of these factors are from the demand side. The first and the most significant factor is the possibility of Chinese TV brands adjusting their panel purchases so as to reduce their inventory levels. TV sales in China have been slow since the start of 2017 and there are expectations that weak sales will persist until the Chinese Labor Day period in early May. Based on the sales results and inventories, Chinese TV brands could revise their panel purchasing plans for May and June, thus creating uncertainty in the TV panel market during this second quarter.

The next two indicating factors from the demand side pertain to the growing purchases in the small-size (i.e. the 32-inch) and the large-size (i.e. the 65- and 75-inch) segments in relation with the falling purchases in the medium-size range (i.e. the 40- to 43-inch bracket). Currently, Chinese TV brands are actively developing overseas markets because of the slowdown in the domestic market. As they plan to export products abroad, their demand for small-size panels has actually gone up. Furthermore, major global TV brands such as Samsung, LG and Sony have kept up their purchases of high-end panels sized 65 and 75 inches while scaling back their purchases of medium-size panels. Their demand for medium-size panels is being severely constrained by pressures on product margins. In sum, the strength of demand on both ends of the size spectrum and the weakening demand in the medium-size range are the two factors that will affect the consumption of production capacity for TV panels during the second quarter.

The fourth factor influencing the TV panel market comes from the supply side and is especially connected to the Chinese panel makers. BOE Technology (BOE) is currently working to raise the production of 43-inch panels at a newly built fab in Fuzhou, while China Star Optoelectronics Technology (CSOT) is increasing the 55-inch panel capacity of its T2 fab in Shenzhen. Once these additional production capacities become available, there will be greater pressure on TV panel suppliers to find capacity consumption strategies.

WitsView’s analysis finds that the weakening of TV panel purchases is not across the board. As mentioned above, the demand for large-size (and high-end) panels has been strong as global TV brands support this market segment. At the same time, Chinese TV brands are pushing products with 32-inch panels into overseas markets. By contrast, the demand in the 40- to 43-inch range is quite low. Therefore, TV brands are adjusting their panel purchases for selected sizes to increase their profits, and a general drop in TV panel demand is not expected in the second quarter.

Also, the capacity expansion efforts from Chinese panel makers are not going to affect the supply in the short term. BOE and CSOT have yet to begin fully using their newly added capacity, so these suppliers’ activities will have very limited impact on panel prices.

WitsView believes that TV panel quotes, which were on a general rise since the second quarter of 2016, more or less reached their upper limits this April. However, there are insufficient conditions that could cause the overall price trend to turn in May and June. Consequently, WitsView maintains that quotes will be stable through the second quarter. Price negotiations for medium-size panels are becoming noisier due to shifting demand and additional production capacity, but their effects are not spilling over to other size segments. In a few special cases of negotiations, prices might be dealt down.

Looking at other panel applications, quotes are sliding in the monitor panel market this second quarter. Quotes for mainstream 21.5-inch TN panels have started to soften since this March due to seasonality and oversupply. Quotes of mid-range and high-end IPS panels (featuring wide-viewing angle) are also expected to drop slightly by about 3~5% compared with the first quarter. Suppliers of these IPS monitor panels have to keep a reasonable price gap with TN counterparts while preserving their market shares.

In the notebook panel market, major notebook brands have adjusted their purchases in March and April, causing prices to weaken for mainstream HD TN panels during that period. However, demand is returning in May and June. Consequently, quotes for HD TN and the more high-end Full HD IPS panels for notebooks will exhibit a stable trend in the second quarter.

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