Panel Makers to Face Revenue Challenges in Q4 as Prices Keep Falling
September 21, 2015 | TrendForceEstimated reading time: 2 minutes
Prices of TV panels continue to drop and are approaching to the products’ cash costs, according to the latest report from WitsView, a division of TrendForce. The pressure relating to business operation is going to multiply for panel makers as they go into the fourth quarter.
WitsView says prices of LCD TV panels steadily increased from the second quarter of 2014 to the start of this year, generating sizable profit for panel makers. However, the depreciation of foreign currencies since the end of this first quarter has slowed down the sales of branded LCD TV sets in Europe and the emerging markets. With profits turning to losses, branded TV vendors have scaled back their panel demand, leading to rising inventory level and falling prices. Hence, the panel market is not showing signs of recovery despite the arrival of the traditional peak season. Since excess inventories need time to be cleared out and Chinese panel makers are still expanding their capacities, the current price downtrend is likely to persist and influence panel purchasers’ decisions. In sum, the panel market’s performance will become even more conservative in this fourth quarter.
TV panels have had a noticeable price decrease with the average decline between the start of this year and present being almost 15%. Among the products, the 32-inch HD OC (open-cell) and the 55-inch FHD OC panels have suffered the worst with their declines respectively at 25% and 16%. The price of the 32-inch HD OC panels has dived from US$93 at the start of this year to US$69 in the first half of September. It is expected to keep falling during this quarter to around US$67, which is below the average total cost of US$70~71 and the average cash cost of US$59~60. As for the 55-inch FHD OC panels, their average price has dropped to US$225 in the first half of September and is nearing their average total cost of US$216~217 (their average cash cost is around US$176~177). WitsView expects the average price of this product segment to fall through its total cost level in October. Panels of other sizes from the 39.5- to the 50-inch still have US$20~45 differences between their prices and total costs. Panel makers therefore will depend mainly on them for profits.
Though the general price decline in the TV panel market is unlikely to ease, there is still some room for profitability. Cutting production is the quickest and most effective way of dealing with continuing oversupply and downward price pressure. Nonetheless, this practice can also impact the growth and profitability of the panel market. Taiwanese and South Korean panel makers have a cost advantage over their Chinese competitors when it comes to Gen-8.5 production as their fabs are near the end of their amortization period. Looking ahead, WitsView expects overcapacity, diminishing demand, falling prices and weak profits to remain as serious issues for the panel market in the fourth quarter.
Suggested Items
Real Time with... IPC APEX EXPO 2024: Sustainability in the Industry
04/26/2024 | Real Time with...IPC APEX EXPOGuest Editor Henry Crandall and Chris Nash of Indium Corporation discuss the company's 90th anniversary and its focus on sustainability. They focus on the benefits of sustainable materials, their compatibility, and value propositions. The conversation also highlights how Durafuse LT technology's role in reducing reflow temperatures is leading to significant cost and energy savings. Nash also touches on downstream sustainability efforts such as using recycled materials for packaging.
Book Excerpt: The Printed Circuit Assembler’s Guide to... Factory Analytics
04/24/2024 | I-Connect007 Editorial TeamIn our fast-changing, deeply competitive, and margin-tight industry, factory analytics can be the key to unlocking untapped improvements to guarantee a thriving business. On top of that, electronics manufacturers are facing a tremendous burden to do more with less. If you don't already have a copy of this book, what follows is an excerpt from the introduction chapter of 'The Printed Circuit Assembler’s Guide to... Factory Analytics: Unlocking Efficiency Through Data Insights' to whet your appetite.
Ark Electronics Expands Global Manufacturing Factory Network in North America and Europe
04/17/2024 | PRNewswireElectronic Manufacturing Company Ark Electronics recently announced the expansion of its Global Factory Network with the addition of Electronics Manufacturing Service (EMS) capabilities in Mexico and Europe.
Microchip Technology Acquires Neuronix AI Labs
04/16/2024 | Microchip Technology Inc.Innovative technology enhances AI-enabled intelligent edge solutions and increases neural networking capabilities.
Fluor Awarded U.S. Air Force Contract Augmentation Program V Task Order for Tinian
04/11/2024 | BUSINESS WIREFluor Corporation announced that the U.S. Air Force Installation Contracting Agency awarded the company a task order contract for Pavement and Transportation Support North Field, Tinian, Commonwealth of the Northern Mariana Islands (CNMI).