Slowing LCD TV demand alters panel manufacturers’ business strategies

USA: LCD TV panel manufacturers are planning less aggressive business strategies for 2013 as LCD TV demand growth slows, according to the latest NPD DisplaySearch Quarterly LCD TV Value Chain Report.

Panel makers are moving to avoid an oversupply of LCD TV panels. This involves a drastic change in business models, which includes developing strategic alliances, making capacity allocation improvements, and expanding product portfolios to include a larger variety of panel sizes. LCD TV panel manufacturers hope that by moving to larger screen sizes, they can decrease unit shipments while increasing total area shipped, thus boosting their bottom lines.

“Consumers are focused on TV prices, while brands have been focused on TV features. This disconnect has resulted in reduced demand and profits for TV supply chain participants in 2012,” said Deborah Yang, NPD DisplaySearch Research director.

“A misalignment in panel size portfolios between buyers and sellers could result in supply constraints. Panel makers and TV brands are trying to strengthen their business portfolios and enhance their bargaining power with supply chain participants in order to improve profitability and gain a competitive edge.”

Taking these factors into account, along with the aggressive TV shipment plans of some TV brands (in particular the top two Korean TV brands and Chinese TV makers), NPD DisplaySearch forecasts 4 percent Y/Y growth in LCD TV panel shipments for 2013 and 11 percent Y/Y growth in TV shipments planned by surveyed TV brands. Samsung and LG, for example, are working with Sharp to increase panel supply in 2013, mostly for 32” panels.

“Some TV brands’ 2013 shipment plans reflect their strategy to set higher targets and secure sufficient panel supply, but they may also be too aggressive,” said Yang. “The TV supply chain is evolving, with Taiwanese panel makers leading the development of new panel sizes and ties with TV brands. Meanwhile, panel and set makers are adopting new business models around open cell and backlight-module-systems (BMS) assembly. Other TV manufacturers may be forced to follow suit—changing the TV value chain over the long term.”