What They Say
Sigmaintell Consulting of China confirmed the view expressed at the SID/DSCC Business Conference that the global TV industry is in a ‘cold winter’ phase with ‘the spring’ still far away.
Market demand remains weak even in China, because of the impact of the epidemic and subsequent lockdowns. The Chinese market was initially expected to see weak growth driven by the “618” promotional season, but demand may continue to decline at a low level. Set makers are being very conservative in their ordering.
In North America, the channel has also delayed the purchase target for “Black Friday” projects and no significant number of valid orders have been reached so far. According to statistics from Sigmaintell, under the influence of conservative procurement strategies of global brands in the second quarter, the number of panels purchased by the global Top 9 brands was 37 million, a YoY decrease of 15.9% and a QoQ decrease of 10.8%.
Smaller sets and lower level brands are also weak after second tier brands took advantage of price drops earlier. According to research data from Sigmaintell, as of 22Q1, second-tier brands accounted for more than 55% of the 32″ panel shipment, becoming the primary source of small-size panel purchases.
The firm believes that the only solution is reducing the effective capacity of the industry, although set makers with good IT panel businesses, such as BOE, will do better than those such as TCL CSOT and HKC which are more dependent on TV. LG is expected to further reduce its G7.5 LCD capacity from this quarter and Sigmaintell believes that more capacity cuts may be needed.
Panel prices will be at or below cash cost by the end of Q2, with an overall surplus capacity in LCD TV panels of 7.3% on an area basis.
Sigmaintell recommends brands and makers develop their sets for gaming and other applications to help the market recover and keep their products attractive, as well as stepping up the quality rather than just scale.
What We Think
There’s nothing surprising here – the message is the same from all the analysts. (BR)