Panel manufacturers successfully raised panel prices in July 2020, and TV brands have accepted the fact that panel prices have risen. This successful attempt caused panel manufacturers to continue to increase panel prices in August. Therefore, the price of LCD TV panels will continue to rise in August 2020, with a month-on-month increase of about 8-10%. The panel size covers the popular sizes of LCD TV panels of 32, 43, 50 and 55 inches. Large-size LCD panels have also seen an upward trend, but the increase is slightly lower than that of small and medium-sized, such as 65-inch LCD TV panels that have a price increase of 4-5%.
Omdia analysis believes that the quarter-on-quarter increase in demand for LCD TV panels in the third quarter of 2020 is expected to reach 25-30%. In the future, panel makers will transfer more production capacity to the production of IT panels instead of TV panels. Omdia predicts that, entering 2021, about 120,000 pieces of 8.5-generation production capacity will be transferred from TV panels to other IT product supplies every month.
In addition, the planned production capacity withdrawal time of South Korean panel makers is getting closer. LG Display is expected to close its South Korean LCD TV panel factory before the end of this year. Samsung Display plans to close its LCD panel factory before mid-December 2020. Strong demand for LCD panels may extend the operating hours of South Korean LCD TV panel factories for several weeks. Panel manufacturers said that the demand for LCD TV panels in the third quarter of this year was 115-130% higher than planned production capacity.
Earlier, panel makers had worried that demand might drop suddenly in the fourth quarter of 2020. The continuous increase in capacity demand in August this year made them more confident in the demand in the fourth quarter of 2020. Some panel manufacturers, especially those in mainland China, insist that the strong demand for LCD TV panels will continue until the middle of the fourth quarter of 2020. Omdia predicts that due to the obvious strong demand in the third quarter of 2020, the demand for LCD TV panels in the fourth quarter of 2020 should be slightly weaker than the third quarter. On the other hand, the demand in the fourth quarter of 2020 is expected to be no worse than the fourth quarter of 2019.
In addition, since the panel manufacturers' goal is to turn losses into profits in August 2020 and the entire third quarter of the LCD TV panel business, they will continue to increase panel prices. But the rapid price increase of TV panels will trigger a change in the market share of TV manufacturers. In the second half of 2020, the demand for LCD TVs was quite strong. Retailers asked to sell more to fill the inventory, but the retailers were unable to increase the price of LCD TVs. Therefore, smaller TV brands and OEM manufacturers will shrink their production due to weak financial conditions and further shrink their market share. The first-tier brands have the opportunity to expand their market share with their strong brand power and supply chain management (SCM).
First-tier brands have the ability to temporarily increase the sales price of LCD TVs, while OEMs and smaller TV manufacturers need to increase prices to maintain operations without loss. Under the same sales price of the whole machine, the first-line brands will gain more sales and market share. Omedia predicts that the price of LCD TV panels will rise rapidly in the third quarter of 2020, which will cause strong price pressure on LCD TV brands in the fourth quarter of 2020.
However, the market also has some concerns about the demand and price of LCD TV panels in the fourth quarter of 2020. First of all, LCD TV sales in the first half of 2020 exceeded expectations, leading to great expectations for demand in the second half of 2020. Second, demand in the second half of 2020 may be delayed to the first half of 2021. In addition, LCD TV panel buyers are subject to soaring panel prices, and profit margins in the third quarter of 2020 are poor. Some TV brands, especially second-tier and smaller TV brands, have given up buying LCD TV panels because of high prices. In addition, some TV brands tend not to participate in TV promotions in order to control costs. These measures may affect the actual sales of LCD TVs in the second half of 2020.
Omdia predicts that after the peak period in the third quarter of 2020, demand will start to slow down in the fourth quarter. Under the background of LCD TV brand manufacturers' strong demand for lower panel prices, LCD TV panel prices may drop.
It is expected that the supply-demand relationship of LCD TV panels in 2021 will be more tense than in 2020. With the withdrawal of South Korean LCD manufacturers, LCD TV demand is expected to recover in 2021, but the supply of LCD TV panels is likely to decrease again. Therefore, LCD TV panel prices will rise again, and the cycle will start at the beginning of the second quarter of 2021 and run through 2021.
