Samsung TV cut 30% order triggered market panic LCD TV panel market Q3 reversal?

In the past two years, the panel industry has been in a rare cycle fluctuation. After experiencing the longest business cycle in nearly a decade, the industry began to reverse in the second half of 2021, and the panel price has continued to decline until now. The range of its rise and fall beyond the expectations of TCL technology and other panel companies, its operating performance also appears certain fluctuations.

Despite this, panel enterprises in order to ensure scale advantage and market position, still maintain a high rate of movement. An industry source said, Samsung s decision to cut orders by 30 percent at a time when the market is in a slump could cause panic in the market. And other brand manufacturers have also requested panel manufacturers, panel prices or continued to decline to the end of the second quarter, and Q3 can be reversed, and panel manufacturers control production strength, Russia and Ukraine negotiations, as well as domestic 6.18 sales and other factors are closely related."

The upward and downward trend of prices exceeded expectations

As we know in the industry, led by the strong terminal market, the price of LCD TV panel began to rise from June 2020, and the rise continued to June 2021, ushering in the longest price rise cycle in nearly a decade. According to my statistics, the price of 32-inch 55-inch panels and below has doubled, while the price of 65-inch and 75-inch panels has also risen significantly.

Thanks to the rising prices of LCD panels and the gradual withdrawal of Korean companies from the LCD market and the gradual shift of production capacity to The domestic market, domestic panel manufacturers such as BOE And TCL Technology saw a sharp increase in revenue and net profit.

Data show that in the first half of 2021, BOE achieved revenue of 107.285 billion yuan, up 89.04% year on year; The net profit of non-deduction reached 11.662 billion yuan, turning losses into profits; TCL Technology's revenue was 74.299 billion yuan, up 153.29 percent year on year. Non-deduction net profit of 5.498 billion yuan, a year-on-year increase of 2923.06%.

The rally also reflects the share prices of the two panel giants, boe and TCL, which hit all-time highs in the first half of 2021.

But just after July 2021, panel prices dropped steeply. The reason is that the supply and demand environment of the global LCD TV panel market has changed significantly, including the withdrawal of subsidies in Europe and the United States during the same period, the aggravation of overseas inflation, the continuous rise of shipping costs and the partial overdraft of demand from the residential economy.

This will directly affect the operating performance of the two leading companies in the second half of 2021. While net profit for the full year of 2021 still doubled, the first-half surge apparently masked the second-half decline.

As for market changes and company performance changes, TCL Technology pointed out that "in 2021, large-size panel prices experienced a relatively rapid round of ups and downs. It can be said that the sustained rise in the first half of the year and the rapid decline in the second half of the year both exceeded everyone's expectations to some extent."

Specifically, in the first half of the year, the high demand for terminal inventory and the shortage of core products in the supply chain drive the panel price continued to rise; In the second half of the year, panel prices began to decline rapidly from the third quarter due to short-term factors such as the withdrawal of subsidy policies in Europe and the United States, the intensification of overseas inflation and shipping pressure.

Samsung Electronics reportedly cut orders by 30%, triggering market panic

LCD TV panel prices continue to fall. Group intelligence consulting data show that in March, in addition to the 32-inch panel stopped falling for two consecutive months, other size panel prices fell more than. More ominously, it expects prices of TV panels of all sizes to continue to fall in April, by between $1 and $6.

"The price of LCD TV panels has not fallen below the cash cost, but is above the cash cost," said Lee Yaqin, president of Group Intelligence. LCD TV panel is expected to be a decline in the second quarter. Prices of all sizes of TV and notebook panels are falling, which means that the global LCD panel market is in a downward trend."

And in the case of TV panel prices continue to fall, vice secretary of China video industry association (Dong Min also told the author that "in the case of the overall market demand downturn, crisis caused to Ukraine, eastern Europe TV sales in 300-4 million, the samsung cut 30%, brings to the market panic, and other brands have to negotiate with the panel makers, Demand lower prices."

According to AVC Revo, 6.8 million sets were shipped in Russia in 2021, accounting for about 3 percent of global TV shipments, followed by 26 percent for Samsung and 17 percent for LG Electronics. More than 70 percent of those shipments were in 43-inch and smaller sizes.

Sigmaintell also said the russia-Ukraine conflict, global inflation and higher interest rates were casting a shadow over global TV demand, with TV makers wary of market uncertainty turning conservative in buying LCD TV panels. Samsung Electronics recently lowered its order for TV panels by 1.6 million units.

South Korean panel maker Samsung Display also decided to exit the LCD market in the face of falling panel prices. In March 2020, Samsung announced that it would halt production of LCD panels, but the price hike caused the company to delay the plan.

Samsung Display's L8-2 production line in Asan, South Korea, is the company's only LCD panel production line. South Korean media reported that Samsung Electronics will withdraw from its LCD business in June after consulting with Samsung Electronics to halt production from the end of 2022.

Q3 may be heading for a reversal

Although samsung display exit the LCD panel market, wuhan 10.5 generation of boe lines, mianyang sun 8.6 generation lines, TCL huaxing T7 has production line (11) is in the stage of climbing capacity, with the release, the manufacturer's production capacity will effectively fill the samsung display exit LCD panel market gap, panel did not significantly reduce the overall supply. In 2022, The global display panel capacity is expected to achieve a high growth rate of 12% year-on-year, with the overall capacity growth rate reaching the largest increase since 2013, According to Group Intelligence.

TCL Technology pointed out that the past few years have been a key stage of production capacity transfer to different countries. The industry pattern has changed dramatically, and the market position of enterprises has been reshuffling rapidly. In order to ensure the scale advantage and market position, panel enterprises have no intention to reduce the turnover rate.

"At present, domestic panel manufacturers have not reduced the vibration rate of LCD panel production lines. The vibration rate of PANEL manufacturers such as BOE and TCL Huaxing was above 95 percent in March, and remains high now," Dong said.

According to CINNO Research, boe's tfT-LCD production lines averaged 92% and 84% in January and February, respectively. In January and February of TCL Huaxing TFT-LCD production line, the overall vibration rate was 97% and 88%. In January and February, four TFT-LCD production lines averaged 90% and 91% respectively. However, boe and TCL Huaxing saw a decrease in the activity rate in February mainly due to the fact that there were fewer days and the Spring Festival holiday, and the decrease was within a reasonable range.

Dong Min said, "although LCD panel manufacturers maintain a high level of vibration rate, but both panel manufacturers and terminal manufacturers, their current inventory is not high." TCL Technology also pointed out in the survey that the inventory in the panel industry rose in the second half of 2021, but fell to less than two weeks in the first quarter of 2022. The inventory recovered to a healthy level, and Huaxing Optoelectronics maintained full production and sales, and the inventory level was lower than the industry average.

However, Dong min also pointed out that "panel prices will continue to decline until the end of the second quarter under the background of the continuous downturn in global end-demand and the downward cycle of display panels. "The subsequent price trend will depend on the actual production control efforts of the panel manufacturers. If the panel manufacturers do not adjust their capacity, they will face the situation of LCD panel prices falling further into the third quarter."

"If the domestic panel manufacturers reduce the overall output rate of about 20% in May, and the Russia-Ukraine negotiations are about to end, the European market is picking up, and terminal manufacturers on June 18 to promote low prices to drive product sales growth, panel prices may immediately ushered in a reversal." Dong Min further said.

Panel price changes also affect the profitability of enterprises. Li Yaqin judge, "this year panel manufacturers' profits will be differentiated, a part of the panel factory will face losses. The current situation is a test of the panel factory's ability to resist risk and demand contraction, product depth, market strategy, product line adjustment speed and other factors will affect profitability."

TCL Technology also said, "After the country transfer comes to an end and the industry competition pattern is reshaped, the healthy and stable development of the industry is in the interest of all enterprises. It is expected that in the face of demand fluctuation, enterprises will pursue balance between scale and benefit.

Guangzhou Viewo Electronics Co.,Ltd, is a professional high-tech factory for LED TV products, specialized in R&D, manufacturing and exporting sales service. 

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