LCD market rebounds in Q2, recovery set for H2

EL SEGUNDO, USA: After declining for the previous nine months, global shipments of large-sized LCD panels rose sequentially by 41.4 percent in the second quarter compared to the first due to higher pricing and healthy demand, according to iSuppli Corp.

The large-sized LCD panel market rose to 129.7 million units in the second quarter, up from 91.7 million in the first quarter. This follows sequential declines of 2.3 percent in the third quarter, of 18.6 percent in the fourth quarter of 2008 and 2 percent in the first quarter of 2008.

iSuppli defines large-sized LCD panels as those having a diagonal dimension of 10-inches or larger.

“On the demand side, strong sales in China spurred by a government stimulus program propped up sales in the first half,” said Sweta Dash, senior director for LCD research at iSuppli. “Meanwhile, notebook panel demand recovered in the second quarter and global LCD-TV sales remained strong.”

Low inventories throughout the supply chain, combined with the severe cut in LCD fab utilization rates and production, pushed the market to tight supply beginning in the first quarter of 2009. As a result, panel prices have been increasing since the beginning of 2009, especially for monitor and TV panels, although these prices were still below manufacturers’ costs.

However, while shipments rose on a sequential basis in the second quarter, the market actually declined in the first half compared to the same period in 2008.

“A full recovery in the large-sized LCD panel market is expected in the second half of 2009, when strong panel demand combined with higher prices will bring the market back to profitability and revenue growth,” Dash said.

Global shipments of large-sized LCD panels in the third quarter of 2009 will rise by a robust 28.9 percent compared to the same period in 2008. Shipments in the fourth quarter will growth by an even more impressive 57.1 percent from the same quarter in 2008.

For the full year of 2009, large-sized LCD panel shipments will rise to 516.7 million units, up 18.6 percent from 435.7 million units in 2008.

However, large-sized LCD panel revenue for all of 2009 is still expected to decline by 8 percent compared to 2008 due to the below-cost pricing throughout the first half of 2009. Revenue in 2009 will amount to $67.2 billion, down from $73.1 billion in 2008.

The figure presents iSuppli’s forecast of quarterly, global shipments for large-sized LCD panels.Source: iSuppli, July 2009

Healthy inventories
Large-sized panel inventory remained at low to normal levels in the second quarter. Inventory is expected to remain healthy until the third quarter.

Panel inventory is expected to remain low, given that panel suppliers worried about overbooking will be controlling panel shipments to prevent inventory from building up at buyers. But panel buyers are starting to pull in orders in preparation for expected tight supply in the third quarter of 2009.

China’s strong LCD-TV growth
The Chinese government’s rural subsidies program has increased TV demand in China. Now that the program has been extended to nine cities, growth is expected to continue through future quarters.

Television panel demand, especially from domestic brands, is expected to be strong in the third quarter to support strong growth expectations.

Branded TV manufacturers are beginning to offer discounts on new models in the United States, especially sets based on LED backlights and products with higher frame rates such as 120Hz and 240Hz.

More aggressive television set pricing, combined with stabilization in the global economy, will drive further demand in the second half of 2009. Television panel demand, excluding monitor panels used for TVs, is expected to reach 130 million units by the end of 2009, up 28 percent from 2008.

Notebook panel demand recovered in the second quarter after a slowdown in the first due to the introduction of notebook product based on Intel Corp.’s Consumer Ultra Low Voltage (CULV) featuring a thinner form factor, 16:9 format panels and LED backlight.

LED-backlit LCD-TVs to grow to 39 percent by 2013

EL SEGUNDO, USA: As prices of LCD panels that use LED backlights fall in the coming years, their use in televisions is set to explode, iSuppli Corp. predicts.

Global shipments of LCD-TV panels with LED backlighting will rise to 90 million units in 2013, up from just 438,000 LED TV panels in 2008. Penetration of LED-backlight technology in LCD-TV panels will increase to 39 percent in 2013, up from 3 percent in 2009.

“The price gap between LEDs and CCFLs traditionally used for LCD backlighting has narrowed due to the higher yield rate of LEDs, as well as the oversupply that resulted in a drastic price reduction for LEDs in the second half of 2008,” said Sweta Dash, senior director, LCD research at iSuppli. “And with the advent of green technology, power savings and thinner form factors, more branded manufacturers are looking at LED-backlit LCD-TVs in 2009. These factors are spurring brand-name television manufacturers to adopt LED backlighting.”

The figure presents iSuppli’s forecast of global shipments of LCD-TV panels equipped with LED backlights for the period of 2008 through 2013.

iSuppli Figure: Global Forecast for Light Emitting Diode (LED) Backlights in Large TFT-LCD TV Panels, 2008-2013 (Thousands of Units)Source: iSuppli Corp., June 2009

LEDs emerging at last in TVs
Branded television manufacturers have offered LED-based LCD-TVs for some years now without much success. Mostly, this was due to a higher price and larger cost differential between LED and CCFL products. However, there is a renewed interest for LED backlight-based LCD TVs with the use of white LEDs.

Instead of focusing only on color gamut, picture quality and high-end RGB solutions, manufacturers are starting to concentrate more on thinner form factors and lower power consumption with the use of side-mounted white LED backlight solutions.

The lower price differential between CCFL and white LED solutions, combined with the lure of thin TV, has led to an increasing adoption rate of LED-based TVs. Branded manufacturers such as Samsung also are focusing on shifting a significant portion of their LCD-TV offerings to LED backlights.

Green light
For LCD-TVs, panel suppliers are offering products with 120Hz frame rates with edge-lit LED backlights to achieve thinner form factors, lower power consumption and mercury-free “green” attributes. In some cases, power savings with the use of LED backlights can be as high as 30 percent to 50 percent. Thickness and weight savings also can be as high as 30 percent to 50 percent.

Owing much to the “green” initiative from many countries in the world, lower power requirements for TVs are expected in the next few years, and the current power-consumption level of many TVs may end up being below these requirements. This will lead to a faster shift to lower-power-consumption products.

In a recent consumer survey presented in iSuppli’s April edition of its US TV Consumer Preference Analysis, more than 50 percent of U.S. consumers take into account the “green initiative” factor when purchasing TVs.

Supply in chains
However, because LEDs also are used for general lighting purposes, there recently has been some concern about LED chip supply. Furthermore, the LED backlight supply chain is still evolving with varieties of solutions and many different suppliers that need to be involved.

Already, panel suppliers are either entering joint-venture partnerships or developing their own in-house LED solutions to streamline the value-chain process, reduce costs and gain better control over the supply.

New innovations and higher performance will help LEDs gain faster adoption in TVs in the years to come. The price difference for LED vs. CCFL TV systems may range from $300 to $700, depending on the size and type of LED used. The gap, however, is expected to narrow in the future, and many branded TV manufacturers are planning new LED-based TV models with very aggressive prices in the second half of 2009.

Given the current high price gap between CCFL- and LED-based LCD-TV sets and panels, panel suppliers are hoping to reduce the price difference —- to less than $100 between the 40/42-inch CCFL and LED-based panels, and to below $150 for 46-inch panels. This compares to a difference of more than $150 for 40/42-inch sizes at present.

With increasing importance being placed on lower power consumption and green initiatives, televisions are expected to have more stringent requirements in the future. LED backlights will enable next-generation TVs to fulfill those requirements.

Prices for premium- and value-brand LCD TVs converge

EL SEGUNDO, USA: The price differential between LCD TVs sold by premium brands and value brands is narrowing as marquee nameplates vie to capture a wider consumer base by offering less expensive models, according to iSuppli Corp.

The lowest price in April for a 40-inch premium-branded LCD TV was $900. The lowest price for a 40-inch LCD-TV offered by a value brand was $615. Comparable 42-inch premium and value brand sets were priced at $955 and $798 respectively.

This narrow price gap makes the premium brands very competitive with value alternatives.

“The rising popularity and growing consumer comfort with value brands like Vizio is prompting premium competitors to offer cheaper LCD TV models in the 40-inch and larger sizes,” said Riddhi Patel, principal analyst, television, for iSuppli.

However, while price is an important consideration for consumers when selecting an LCD-TV to buy, it’s not the most important factor.

“Consumers’ No.-1 consideration when buying a new LCD-TV isn’t price, but picture quality,” Patel said. “Price is secondary. So even if premium and value brands reach price parity, the dominant factor will still be which television actually looks better to the naked eye, rather than the price on the tag. Obviously, in a perfect world, that would even the playing field. But when it comes to consumer electronics, it is anything but even. Brand recognition is an important asset for any company. Who would choose a nameless Taiwanese or Chinese brand over a Sony Bravia or a Samsung?”

However, there are exceptions to this rule. For example, US-based Vizio has achieved remarkable success as a premium alternative brand built from the ground up.

According to iSuppli’s Television Market Tracker Service, Vizio surged to the top spot in the US and Canadian LCD-TV market in the first quarter.

Vizio’s lowest ASP for a 42-inch Cold-Cathode Fluorescent Lamp (CCFL) backlit, 60Hz refresh rate, full High-Definition (HD) LCD-TV was $850. In comparison, Samsung and Sony 40-inch LCD-TVs with the same configurations carried ASPs of $1,000 and $1,090, respectively.

The figure presents global average price trends for 40/42-inch LCD TVs, with full high definition resolution, 60Hz refresh rates Cold-Cathode Fluorescent Lamp (CCFL) backlighting.Source: iSuppli, June 2009

A premium on premium features
While the premium brands now are offering less-expensive LCD TVs, they continue to produce higher-end models with up-to-date features.

Average LCD TV prices in April in the 40-inch and larger screen sizes increased by 3 percent on a monthly basis, despite drops for the older models, as premium brands continued to introduce more full-featured sets in the larger sizes during the month.

Samsung in April introduced more LED backlit models, including the 8000 series. Prices on these high-end models in the 40- to 49-inch segment range from $2,500 to $4,000, varying by brand and size.

“The premium brands’ dual-pronged strategy of offering high- and low-end models can help them to maintain market share amid the rise of Vizio,” Patel said.

Beyond LED backlights, LCD TVs capable of viewing Internet videos and web content also are showing up as a new feature for televisions, mainly on the premium brands.

iSuppli expects average LCD TV selling prices to decline slightly in the coming months, as brands and retailers roll out with promotions for the upcoming “Dads and Grads” season. However, average list prices likely will remain flat as more new models are added to the product mix. In general, current inventory levels at the retailers are at a healthy five to six weeks.