Worldwide LCD TV panel supply, which was tight throughout 2014, began to ease in Q1’15, according to IHS’ data. The resulting rising inventory is expected to cause prices to fall in Q2 and Q3.
IHS says that the LCD TV panel production:demand ratio rose from 2% under-supply in Q3’14 to 1% over-supply in Q4, and 4% over-supply in Q1’15. The ratio is expected to continue rising to 6% over-supply in Q2.
The average time TV panels remain in inventory before being shipped to TV makers will rise from 3.6 weeks in January to 4.3 weeks in May, says IHS. As inventory climbs, 32″, 40″, 55″ and other key panel sizes will see a price fall in Q2 and Q3 this year.
ASPs for mainstream (i.e. 32″, 40″ and 55″) sizes have softened since March last year. Demand fell gradually, due to inventory adjustments at the end of the 2014 Christmas shopping period and the Chinese New Year this year. LCD panel output had been meeting demand before the 2014 holiday season promotions began.
In 2014, panel makers were struggling to keep up with the surge in demand amid large-screen popularity. Because of this, panel inventories continues to fall from Q1’14 to Q3’14. In Q4, panel production rose slightly faster than demand. However, inventories at both TV panel manufacturers and set makers remained below normal levels, due to rising year-end demand.
Plans for LCD panel production line renovation and new technology applications were scheduled for last year. However, they were delayed to 2015 because lines ran at full capacity, meeting orders for strong TV panel demand in 2014, says senior analyst Alex Kang. He continued, “Producers this year will adjust supply of some lines for renovation amid declining TV panel demand”.
Another factor affecting panel demand is currency fluctuations, especially in Europe and in developing economies like Eastern Europe, Russia and South America. Exchange rates have forced rising TV prices, which has hampered consumer purchasing.
“The industry is now worried about a potential oversupply this year if weakening demand turns out to be more than a seasonal factor and continues through the third quarter”, said Kang. “TV set makers are considering lowering TV sales targets and downsizing orders for panels amid sluggish consumer sales caused by foreign exchange volatility”.
