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According to TrendForce’s research, global TV shipments are projected to drop by 24.3% QoQ to 41.99 million units for 1Q23. This shipment figure represents a new low for first-quarter result in almost a decade. TV brands on the whole have not been performing well, but Chinese brands are in a worse situation because this year’s Lunar New Year holiday began in January. With the reduced number of work days in January, Chinese brands pulled some orders forward and began shipments for these orders as early as the end of 2022. Therefore, the effect of the low season during 1Q23 has been more severe for them. TrendForce projects that the total TV shipments from Chinese brands in 1Q23 will register a larger-than-average QoQ drop of 30.6%.
TrendForce pointed out Chinese brands will stock up on TV panels ahead to time in the beginning of 2Q23 so as to prepare for the 618 promotional activities that will be held by the major domestic e-commerce companies. China’s domestic demand is anticipated to recover this year as the government there has eased the pandemic-related restrictions at the end of last year. TV brands are working hard to synchronize with the large-scale sales events that e-commerce companies will be putting on throughout the year. Furthermore, Amazon will also be hosting its Prime Day this June as scheduled. With the demand generated by various promotional activities, TrendForce forecasts that global TV shipments will grow by 8.7% QoQ to 45.64 million units for 2Q23. This growth rate represents a new high for second-quarter result since 2015.
Inventory Levels Have Fallen Across TV Supply Chain Due to Panel Makers Maintaining Low Capacity Utilization Rates for Half-Year Period
Display panel makers started to significantly scale back production in September 2022 in order to limit their losses. Owing to their production cuts, panel prices managed to stop falling and rise a bit for a short two-month period. However, prices stopped rising in 4Q22 with the conclusion of TV brands’ promotional activities for the year-end holidays. Looking at 2022 as a whole, shipments of TV panels were heavily impacted by the sharp drop in the demand for end products. This development also caused panel prices to sink below the cash cost level and thereby force panel makers to experience a considerable loss. To deal with this crisis, panel makers resorted to engaging in production only when there are orders. Hence, they have kept a low level of capacity utilization rate for a half-year period. And, in doing so, they have not only limited their losses but also pushed inventory levels down to their usual levels across the TV supply chain.
Chinese TV Brands’ Total Panel Procurement Quantity for 1Q23 Has Been Corrected Up by 10%, and Non-Mainstream Brands Are Certain to Experience Hikes in Panel Prices in February
With panel makers being disciplined in production, buyers of TV panels now anticipate that panel prices will reach the bottom very soon. Recently, Chinese brands have begun to stock up in preparation for the 618 promotional activities. Conversely, international (non-Chinese) brands still maintain a strict control over panel procurement quantities because of uncertainties in the US and European markets. Besides Chinese brands, smaller brands and ODMs have also provided additional demand during this wave of inventory building. Presently, TV panel supply as a whole is tightening, and the non-mainstream TV brands are certain to face rising panel prices in February.
Among large-sized TV panels, 65-inch panels have had a fairly large negative profit margin, so they are forecasted to be the first to experience a price rebound of US$2~5 in February. Turning to medium-sized TV panels, LG Display lowered production capacity for 50- and 55-inch panels at the end of last year. Therefore, the supply of these products are tighter and more concentrated. Their prices are forecasted to rise in February as well by US$1~3. Currently, the mainstream TV brands have yet to reach a consensus with panel makers on the subject of price hikes in February because the demand for end products is still quite weak. Therefore, panel makers are more definite on raising prices on panels shipped to the non-mainstream brands for February. This would be the first time that the non-mainstream brands experience panel hikes ahead of the mainstream brands.
TV Panel Prices Are Expected to Rise Across the Board in March and Return to Cash Cost Level Before Busy Season
Looking ahead to March, Chinese brands will continue to stock up for the 618 promotional activities and Amazon’s Prime Day, so prices are forecasted to climb for TV panels of all sizes. Prices of TV panels that are 32~55 inches in size are forecasted to rise by 3~5% MoM, and prices of 65-inch TV panels are forecasted to rise by 7~9% MoM. Because of this round of significant upward adjustments, TV panel prices will likely return to the cash cost level before the busy season of 2H23.