As Retail TV Sales Slump, War Breaks Out Between Panel Manufacturers + TV Brands Over Prices
As TV prices rise in Australia and as sales slow at retail stores, tension between panel makers and TV makers has increased in recent months with panel manufacturers wanting to hold the price up as TV brand manufacturers chase cheaper display panels.
At the same time South Korean brands are looking to cut their reliance on Chinese panel manufacturers with a move to Japanese and South Korean suppliers.
According to research group Omedia, TV manufacturers are “desperate” to cut costs as the market for TV’s falls into double digit declines in some sizes with OLED sales performing better than other TV technology.
A recent turnaround of the TV display business in late 2Q23 and 3Q23 has not been enough to stimulate the market with several manufacturers facing losses this year.
At the same time, manufacturers are facing pressure from retailers to cut TV prices as market demand remains sluggish.
Informa claims that panel price negotiations continue to be tough in 4Q23, with panel makers forecasting lower panel prices in the immediate future, the risk of a panel price collapse in 1Q24 cannot be overlooked the research group claims.
The weak market demand and the panel price negotiation results have upset TV makers and will urge them to further cut their panel purchasing plans for 4Q23, making the demand outlook in 1Q24 unclear.
In addition, TV makers will lose confidence to order new panels when they sense that TV panel prices are set to fall.
As a result, TV manufacturers are pressuring panel makers to cut their fab utilization to be close to or back to the low level as seen in last September or early 2023.
Omdia forecast that Chinese TV manufacturers such as TCL and Hisense will be more than willing to refill their panel orders after 1Q24 if they can stay competitive and expand their global market share.
This year brands such as TCL have grown market share in Australia.
Currently Chinese TV manufacturers are reducing their buying plans as they see global demand for TV’s falling in the next two quarters.
Their panel purchasing volume shares in 1H23 and 2H23 are now forecast to be 51% down which is rare because the buy in volume in the second half of the year is normally greater than in the first half of the year.
Several Chinese brands have already taken action and downsized their panel purchasing plans to urge panel makers to stop increasing prices and give them price concessions through rebates or incentives according to Informa.
As for South Korean manufacturers both Samsung’s and LG Electronics’ purchase volumes are forecast to pick up in 3Q23 but only modestly and lower than previously forecast.
Omedia claim that this is mainly because they slashed their panel demand from panel makers, particularly BOE and HKC Display, in 3Q23 and 4Q23.
Back in September 2023, South Korean TV makers admitted that they were still carrying higher-than-normal inventories in markets such
Both Samsung and LG predict that shipments of TVs are expected to be weak compared with their shipment records in past years.
Insiders claim that what’s crippling all TV brands is the “slow sell through rate” by retailers who are banking on Black Friday sales to deliver a lift in sales.
Both Samsung and LG management claim that they are concerned about weakening profit margins in 2H23 owing to rising panel prices and the price competitiveness of Chinese TV makers in the market.
One Samsung executive claims that the Chinese brands are suffering because they are trying to “Buy market share”.
Recently both Samsung and LG Electronics flew Australian buyers to South Korea to show them the 2024 TV ranging which will be on display at CES 2024.
Orders from global retailers are already weaker than the previous years.
The forecast for their panel purchasing plans for 4Q23 is also conservative, as shown in Figure 2, or lower than the previous forecast because of the much lower demand for panels place on panel manufacturer BOE.
In August and September 2023, panel price negotiations between TV makers and panel suppliers were being described as being “Very tough”.
,Samsung have said that they prefer to wait and monitor the results or look for clear signs of the supply chain dynamics before refilling their panel orders.
This is also driven by the fact that both Samsung and LG Electronics are currently carrying large volumes of TV inventory that is impacted by the poor sell through at retail stores.
In 2024, Omdia estimates that Samsung will maintain their panel orders at levels similar to their 36 million units for 2023.
Meanwhile, Samsung’s plan for OLED TVs will be about 2 million units, double the 2023 shipment forecast.
According to Omedia, both Samsung and LG Electronics plan to reshape their supply base in 2024.
They are tipping that Samsung will significantly reduce its purchases from BOE in 2024.
Samsung and LG Electronics plan to shift their panel demand from Chinese makers to Taiwanese (AUO and Innolux), Japanese (Sharp), and South Korean (LG Display) panel vendors in 2024.
LG Display will become a critical supplier or leverage for both Samsung and LG Electronics for LCD and WOLED TV panels in 2024.