Hardware equipment industry

In the fourth quarter of 2020, the average price of LCD TV panel (ASP) rose for five consecutive months From Omdia

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The following is the In the fourth quarter of 2020, the average price of LCD TV panel (ASP) rose for five consecutive months From Omdia recommended by recordtrend.com. And this article belongs to the classification: Hardware equipment industry.

main points

In the fourth quarter of 2020, the average selling price (ASP) of LCD TV panels, especially those below 50 inches, rose to the level of the fourth quarter of 2017 after rising for five consecutive months.

Omdia predicts that the shortage will continue in the first quarter of 2021, and panel manufacturers intend to continue to increase the ASP of LCD TV open cell to the level of the first quarter of 2017.

In the case of soaring LCD TV panel prices, LCD TV brands and OEM manufacturers are still profitable. Now, however, their profitability is rapidly fading, and some TV brands are starting to raise retail prices.

Since June 2020, there has been a shortage of LCD TV open cells, and panel prices have rebounded strongly. In the third and fourth quarters of 2020, the price of LCD TV open cell continued to rise.

The shortage of LCD TV panels in the second half of 2020 can be attributed to the following reasons:

The impact of the new crown epidemic in the first half of 2020, especially in China, has delayed the production plan and capacity implementation of some new TFT LCD fabs.

The trend of home office and home entertainment has stimulated the purchase demand of new LCD TV.

LCD TV brands and OEM manufacturers maintain high panel purchasing volume to promote sales and win more market share in the terminal market. Some manufacturers will advance the demand from 2021 to the second half of 2020 because they predict that the demand will be tight for a long time due to no new production capacity in 2022.

Government stimulus policies in many countries provide more budgets for consumers to buy LCD TVs.

South Korea’s TFT LCD capacity restructuring has removed part of its LCD capacity from global supply. Although some LCD production capacity in South Korea will be extended to 2021 due to the fulfillment of orders and contracts, most TFT LCD production capacity in South Korea will be closed in 2020.

LCD TV open cell manufacturers are targeting a 5% year-on-year decline in unit shipments in 2020 (YoY) and a further 5% decline in 2021. LCD TV open cell manufacturers will either transfer more LCD production capacity to it panels, or focus on larger panel shipments rather than unit shipments.

Some key components are in short supply, especially glass substrate and display driver IC. Especially in the fourth quarter of 2020. This restrains the order execution of panel manufacturers, and urges panel buyers to do more double book. The panic of component shortage is spreading throughout the supply chain, leading to more “double booking” of TV panel buyers.

The shortage makes LCD TV open cell manufacturers continue to raise prices, and the interval between price increases in each month in the second half of 2020 will be shortened. It is not common that the price of LCD TV open cell fluctuates by 10% every month, but it will happen in the second half of 2020.

Due to the oversupply in 2018 and 2019, many panel manufacturers have been losing money in the past five or six quarters. Now, some panel manufacturers are taking advantage of this opportunity to aim at higher profit margins and try to make up for the previous losses.

In the past decade, due to the nature of the industry, LCD TV panels have shown a cyclical trend of oversupply and oversupply. The over investment and demand surge of panel manufacturers benefit from the cross cycle of economic prices in the past decade. People in the industry call it “crystal cycle”.

Omdia pointed out that crystal cycle will continue in 2020 and 2021, and the open cell price of LCD TV is the most prominent representative.

When the demand growth of LCD TV panel exceeds the capacity growth of LCD TV panel, the market supply is tight and the panel price rises. When the LCD TV panel production capacity growth is greater than the demand growth, the market is faced with excess, and the panel price will decline.

Since the third quarter of 2017, LCD TV open cell has been oversupplied and panel prices have been falling. China’s active capacity expansion led to two consecutive years of oversupply in 2018 and 2019. In the past two years, there have been short-term tensions, such as the third quarter of 2018 and the first quarter of 2020. Most of the time, however, prices have been falling. The oversupply in the past two years has greatly affected many LCD manufacturers. Taiwan’s LCD manufacturers have been forced to enter the niche market and it panel manufacturing because of the struggle in the past two years. South Korean LCD manufacturers also shut down LCD production capacity because of the serious losses in the past two years, and switched to OLED strategy.

Now, due to the shortage, the isolation of the new crown epidemic and the strong demand caused by the home trend, panel manufacturers continue to increase the price of LCD TV open cell.

According to omdia’s large size display panel market tracking report, in the fourth quarter of 2020, the ASP of LCD TV panels, especially those below 50 inches, rose to the level of the fourth quarter of 2017 after five consecutive months of growth.

The price of a 32 inch HD LCD TV panel was $74 in the first quarter of 2017 and then dropped to $65 in the fourth quarter of 2017. The price is $35 in the second quarter of 2020, compared with $65 currently.

Figure 1: LCD TV open cell ASP (US $) from Q1 2017 to Q4 2020

Source: Omdia

Omdia expects the shortage to continue in the first quarter of 2021, and the panel manufacturers’ goal is to increase the ASP of LCD TV open cell to the level of the first quarter of 2017.

The reasons why it is expected to continue to be out of stock in the first quarter of 2021 are as follows:

Recently, the accident of NEG in the glass furnace and feed tank of gaozhen glass factory in Japan affected the glass substrate supply in the first quarter of 2021.

In the first quarter of 2021, LCD TV panel manufacturers’ purchasing volume decreased slightly, but the purchasing volume is still very high.

At present, there is no immediate solution to the problem of driver IC shortage caused by the limited foundry capacity of 8-inch wafer. With power management ICs and complementary metal oxide semiconductor (CMOS) image sensors occupying more 8-inch wafer capacity, drive ICs will continue to be tight in 2021. Panel manufacturers have to pay higher prices for driving ICs and wafers to get capacity allocation.

The price of a 32 inch HD LCD TV panel was $74 in the first quarter of 2017 and then fell to $65 in the fourth quarter of 2017. Its price was $35 in the second quarter of 2020 and rose to $65 in the fourth quarter of 2020. Panel manufacturers aim to further raise prices to more than $70 in the first quarter of 2021.

The price of the 40 inch FHD was $142 in the first quarter of 2017 and then dropped to $100 in the fourth quarter of 2017. Its price was $65 in the second quarter of 2020 and rose to $100 in the fourth quarter of 2020. Panel manufacturers aim to further raise prices to more than $130 in the first quarter of 2021.

The price of the 43 inch FHD was $155 in the first quarter of 2017 and then fell to $112 in the fourth quarter of 2017. Its price was $71 in the second quarter of 2020 and rose to $112 in the fourth quarter of 2020. Panel manufacturers aim to further raise prices to more than $130 in the first quarter of 2021, close to the level of 2017.

The price of the 50 inch UHD open cell was $210 in the first quarter of 2017 and then fell to $152 in the fourth quarter of 2017. Its price was $92 in the second quarter of 2020 and rebounded strongly to $146 in the fourth quarter of 2020. Panel manufacturers are likely to fight for another $20-30 rise in the first quarter of 2021.

The price of the 55 inch UHD open cell was $220 in the first quarter of 2017 and then fell to $209 in the fourth quarter of 2017. In the second quarter of 2020, its price dropped to only 111 yuan. After the price increase in the third quarter of 2020, it will reach US $178 in the fourth quarter of 2020. Omdia expects panel manufacturers to target further gains in the fourth quarter of 2017.

The price of the 65 inch UHD open cell was $422 in the first quarter of 2017 and then fell to $345 in the fourth quarter of 2017. Its price fell to $175 in the second quarter of 2020. As China’s gen10.5 production capacity increases supply, the price also decreases. However, due to the shortage, the price was raised to $227 in the fourth quarter of 2020. Panel manufacturers may target a price of more than $300 in order to further improve.

In the first quarter of 2017, the price of the 75 inch UHD open cell was 949 yuan, which fell to 686 yuan in the fourth quarter of 2017. In the second quarter of 2020, its price dropped to $297. With the increase of gen10.5 production capacity in China, the price also decreases. However, due to the shortage, the price rebounded to $324 in the fourth quarter of 2020. Panel manufacturers may target the price at more than $400 to further increase the price.

The price of LCD TV open cell is expected to reach the level of 2017. This is at least the goal of panel manufacturers. As long as there is no possibility of oversupply in the short term, they will seize any opportunity to raise prices.

Another issue that needs to be considered is whether the demand of consumers will be affected by the high open cell of LCD TV. As consumers are not easy to accept higher TV prices, LCD TV brands and OEM manufacturers have temporarily sacrificed their profit margins. However, due to the strong demand recently, some TV brands and OEM manufacturers are increasing the average price and retailer price of LCD TV, or canceling the marketing promotion plan.

In order to measure the price elasticity of LCD TV open cell, omdia established an index called “LCD TV ASP / LCD TV panel ASP”. Divide LCD TV ASP by LCD TV open cell ASP, and then test its rationality.

Figure 2 shows LCD TV ASP / LCD TV open cell ASP index from the first quarter of 2017 to the fourth quarter of 2020.

Figure 2: LCD TV ASP / LCD TV open cell ASP index

Source: Omdia

The index fluctuates due to changes in ASP of LCD TV and open cell price of LCD TV. Due to the characteristics of consumer electronic products, the ASP of LCD TV has been on the decline, but the price of open cell has been rising and falling due to the cyclical changes of supply and demand.

When the index is high, it means that the ASP of LCD TV is high, while the price of open cell is low, which means that LCD TV brands and OEM manufacturers enjoy a good profit margin. On the other hand, when the index is low, it shows that the ASP of LCD TV is not much higher than that of LCD TV open cell, which means that panel manufacturers benefit from the price of LCD TV open cell, while TV manufacturers are suffering from high cost.

Figure 3: ASP / LCD open cell ASP index of LCD TV

Source: Omdia

In the past 10 quarters, the index has soared to between 4 and 5, which means that the LCD TV retailer ASP is four to five times higher than the LCD TV open cell. It also means that the price of the LCD TV open cell has fallen to an all-time low. While LCD TV brands and OEM manufacturers make profits, LCD TV open cell manufacturers make losses.

In the first quarter of 2020, the index began to fall as panel prices rose. In the second half of 2020, the panel supply is still tight, the price of LCD TV open cell continues to soar, and the index drops to a lower level.

In the case of soaring LCD TV panel prices, LCD TV brands and OEM manufacturers are still profitable. Now, however, their profitability is rapidly fading, and some TV brands are starting to raise retail prices.

The index of the fourth quarter of 2020 has not reached the level of the fourth quarter of 2017 or the first quarter of 2017. This means that panel manufacturers will continue to push open cell prices up.

From: omdia

More reading: omdia: the average size of LCD TV panel is expected to grow by two inches in 2021 omdia: it is expected that the global display glass substrate will continue to be in short supply in 2021 Qunzhi Consulting: in the first half of 2019, the global shipment volume of LCD TV panel will be about 140 million pieces, and the share of mainland manufacturers will reach 45.8%. In Q1 of 2020, the global shipment volume of LCD TV panel will be 63.03 million pieces, a sharp decline of 10.6% year on year IHS Markit: it is expected that the shipment volume of LCD TV panels will be down in 2020 compared with the same period of 2020. The volume of LCD TV panels in mainland China will reach 7 million 100 thousand IHS in March. In January, China shipped to mainland China Manufacturers LCD TV panels to drop 19%IHS Markit: the panel manufacturers of China began to dominate the market of large LCD TV panels in Markit. Markit: LCD TV panel demand will decline in Q1 of 2018 omdia: LED display global market revenue will drop by 14.0% in the second quarter of 2020. Omdia: it is estimated that the sales of display panels of Chinese manufacturers will reach US $42.5 billion in 2020 Year on year growth of 5% omdia: China’s intelligent video surveillance market will reach US $16.7 billion in 2024 omdia: China’s semiconductor 28nm process is expected to achieve self-sufficiency in the industrial chain within two years

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