May 10, 2012 — Global TV shipments will remain flat in 2012, for the second year in a row. Shipments to developed markets, especially Western Europe and Japan, will fall 11% year to year (Y/Y), offset by 8% growth Y/Y in emerging markets, according to the NPD DisplaySearch Quarterly Advanced Global TV Shipment and Forecast Report.

The liquid crystal display (LCD) TV market will continue to grow, capturing market share from declining cathode ray tube (CRT) and plasma technologies. Consumers in saturated markets are cautious, making them sensitive to price differences. “LCD is expected to continue narrowing the price gap with plasma,” noted Paul Gagnon, director of North America TV Research for NPD DisplaySearch. Many TV brands are “focusing on profits over volume,” Gagnon added, suppressing the rate of price erosion compared to recent years. This too could impact demand.

Larger panels sizes continue to increase share, lifting the average size of TVs shipped to almost 35” in 2012, up from less than 30” four years ago. The growing number of larger display factories used to produce LCD TV panels has helped the average area price to fall rapidly. In developed markets, this encourages existing flat panel TV households to trade up to a larger size, driving a new replacement wave. It also lowers barriers to first-time adoption in emerging markets converting from CRT TVs.

LCD TVs are expected to account for more than 88.5% of total TV shipments worldwide in 2012, up from 82.5% in 2011. LCD TV shipments will grow 7% to 220M in 2012, and rise to 241M in 2013. Expect LCD TVs to hold >90% market share in 2013.

Plasma TVs will account for just 5.3% of shipment volume in 2012, down from its peak at about 7.4% in 2010. Plasma TV shipments will fall 24% in 2012 to 13.1M, dropping to less than 3M by 2015.

The newest flat panel TV technology, organic light-emitting diode (OLED), will debut in large sizes in 2012, but volume will be very small, starting with 50,000 or fewer units.

Figure. Worldwide TV forecast by technology. SOURCE: DisplaySearch Quarterly Advanced Global TV Shipment and Forecast Report.

The share of LED-backlight LCD TVs will increase to 70.1% in 2012, up from 45.3% in 2011, thanks to new low-cost direct-LED backlight models challenging CCFL-backlit models. http://www.electroiq.com/articles/sst/2012/05/lower-cost-led-backlights-darken-ccfl-future.htmlWhile bulkier than LED-edge-lit models, lower-cost direct-LED LCD TVs will attract the most price-sensitive consumers. Even so, 5 times as many edge-lit LED backlight LCD TV will be shipped than direct-lit models, and the premiums for edge-lit LED LCD TVs are expected to start falling faster later in the year.

3D TV had a soft start in North America, but is experiencing a surge in popularity elsewhere, with shipments of more than 24M units in 2011 and an anticipated 90% increase in 2012 to 46M units. Shipment penetration is expected to exceed 25% in both Western Europe and China and 20% in Eastern Europe. While North America is still expected to lag with 19% penetration in 2012, it should be the leading 3D shipment region by 2014, when most large screen sizes will include 3D capability as a standard feature; North America will be the top region for 40”+ TV shipments.

China became the largest overall TV market in 2009 and the largest LCD TV market in 2011. However, with household flat panel TV penetration reaching high levels in urban areas, growth is expected to slow until rural cities start seeing increased adoption. LCD TV shipments are forecast to grow 11% Y/Y in China during 2012, down from 17% Y/Y growth in 2011. Some of the first evidence of this slowdown was seen in recent May Day holiday sales results in China. According to Bing Zhang, Research Director in the China Market for NPD DisplaySearch, “Analysis of sales during the recent May Day holidays in China indicates that sell-through was below expectations with low- to mid-single-digit growth and slightly elevated inventories after the end of the holiday.”

The DisplaySearch Q1’12 Quarterly Advanced Global TV Shipment and Forecast Report, available now, includes panel and TV shipments by region and by size for nearly 60 brands, and also includes rolling 16-quarter forecasts, TV cost/price forecasts, and design wins.

NPD DisplaySearch provides global market research and consulting in the display supply chain, as well as the emerging photovoltaic/solar cell industries. Learn more at http://www.displaysearch.com/.Visit our new Displays Manufacturing Channel on Solid State Technology and subscribe to our Displays Digest e-newsletter!

May 1, 2012 — LCD panel shipments to Chinese TV makers peaked in December 2011, fell sharply in January 2012, and recovered in February, shows the NPD DisplaySearch MarketWise-LCD Industry Dynamics report. In February, shipments to Chinese TV makers from DisplaySearch’s surveyed panel makers reached 3.75 million units, up 18% month over month (M/M).

Panel shipments to Chinese TV makers are estimated to have grown seasonally 24% in March and 2% in April, affected by May Day holidays. In April, the supply chain’s production and inventory build-up is expected to have stopped. Chinese TV makers’ demand for panels will therefore fall 13% and 8% M/M in May and June, respectively.

Supply constraints were caused by low yields on new models, and adoption of new production technology at panel makers, not recovering demand in the market. Panel makers also rearranged panel capacity, and TV makers asked them to build production for new models.

There is little margin for price declines, according to TV makers, with some reporting that panel prices have reached bottom. April is expected to show a price hike for TV panels, depending on price negotiations, and interactions between Chinese TV makers and leading TV makers with their captive panel suppliers.

Figure. LCD TV panel shipment to China TV makers (millions). SOURCE: NPD DisplaySearch MarketWise-LCD Industry Dynamics.

Chinese TV brands have been cautious about building up production or stocking more panels, keeping inventory levels at about 5-6 weeks of TV sets and 7-10 days of panels on hand. Inventories have stayed at these levels even with slower domestic demand during the last two months. Most Chinese TV makers surveyed by DisplaySearch believe they can get the display panels they need from suppliers, excepting 42” and 47” and certain other models that are forecast to have supply constraints in April.

The latest industry survey shows that some panel makers have further lowered their shipment plans for Q2’12 more than once. Shipment plans for March were up a modest 2%, but DisplaySearch sees them decreasing by 1-3% in April and May. Panel makers also need to reduce their shipment plans to better react to soft demand and avoid inventory problems. This industry-wide adjustment helps stabilize supply and demand throughout the forecast months.

The two major Korean panel makers reduced their shipment targets for April and May, expressing concern about overall demand in China. This is in contrast to the forecast changes at Taiwanese panel makers. There may be fewer subsidy programs this year, and the home appliance to rural program will be the only one left in China. The decreased forecast is also a result of competition and the Korean panel makers’ business strategies (e.g. open cells) involving Chinese TV makers.

Chimei Innolux will continue to lead in panel shipments, and has significantly increased its shipment forecast for the next 3 months. Despite its increased targets, Chimei Innolux shows a clear seasonal trend in the Chinese market. Their shipments grew 30% M/M in February, and they are estimated to have peaked in March with a 24% M/M increase. Chimei Innolux will maintain this high level of shipments in April before seeing declines of 20% and 17% M/M in May and June, respectively.

LG Display does not have a positive view of Chinese demand and expressed concern that inventory might become an issue in Q2 2012. LG Display’s Q2 2012 shipment plan for China is conservative, and the company is not supporting an open-cell business for its external TV customers. At the same time, LG Display faces competitive pressures from Taiwanese panel makers on the new sizes: 29”, 39”, and 50”.

Samsung increased its TV panel shipments slightly in March. The company forecast that monthly shipments would trend downward in Q2 2012. It is projecting a low forecast for shipments to the Chinese market, especially in June. The target for June shipments is even lower than the record low that occurred in January. DisplaySearch’s industry checks revealed that TCL, Samsung’s major Chinese local TV customer, will reduce its panel procurement to support CSOT, its captive panel vendor. Despite the risk of losing some business from Chinese TV customers, Samsung expects an increase of business from its captive and strategic customers in Q2 2012. Samsung may implement its aggressive business strategy as planned, sending open-cells to China this year.

AUO plans to ship more in March, but capacity constraints and yield rate issues limit AUO’s panel output. On the demand side, AUO reported that some Chinese TV customers were adjusting inventory and pushing shipments back to April.

BOE failed to meet its shipment targets for January and February, but the company still plans to increase its shipments throughout the forecast months. BOE is focusing on the supply of 32” in particular, and there is concern about a supply imbalance for 32”, especially in the Chinese TV market. Currently, more than 55% of BOE’s panel shipments are to Chinese TV makers.

There is competition from China’s local panel makers. Recently, China’s Ministry of Finance officially announced changes to the import duties on certain products, which will be effective April 1, 2012. Among them is a duty on 32”+ TV open-cells. The duty on open-cells will be increased from 3% to 5%. According to our cost analysis, the increase might not be enough to force Korean and Taiwanese panel makers to build fabs in China. However, if domestic suppliers build more LCD TV panel fabs as planned, then the import duty might be increased further. For political and business reasons, foreign panel makers are considering building LCD fabs in China. Previous plans included building fabs, but current plans include the option of moving existing fabs. An argument against building new capacity is the overcapacity in the industry.

Access the report: MarketWise-LCD Industry Dynamics. DisplaySearch LLC, an NPD Group Company, is online at www.displaysearch.com.

Visit our new Displays Manufacturing Channel on Solid State Technology and subscribe to our Displays Digest e-newsletter!