Prices of liquid crystal display (LCD) TV panels, which account for 90% of the global TV market, have stopped rising after peaking in May and June. Prices are expected to fall in the third quarter amid sluggish TV demand and oversupply as LCD panel makers in China and Taiwan increase production.
LCD TV panel prices for all sizes hit a year-to-date high in May and remained the same until June, according to market research firm DSCC on June 5. Beginning in July, LCD TV panel prices are expected to decline by 0.9% to 2.6%, depending on the size. The price of a 55-inch LCD TV panel, the most popular size, rose 8% from $122 in January to $132 in May this year. Compared to the record-low price of $82 in September 2022, this is a 61% increase.
The price of 65-inch panels also increased 9% from $164 in January to $179 in May this year. In July, the prices of 55-inch and 65-inch panels are expected to drop to $130 and $176, respectively.
Chinese panel makers, accounting for more than 70% of the LCD TV panel market, reduced production in the first quarter to drive up panel prices. The average utilization rate of panel manufacturers fell to 76% in the first quarter, and the input of LCD thin-film transistors (TFT) decreased by 2% compared to the previous quarter. As panel prices started to rise, panel manufacturers began increasing production again in the second quarter. The input of LCD TFTs in the second quarter of this year is expected to increase by about 10% compared to the previous quarter.
But TV demand remains weak. According to market research firm Omnia, TV shipments in the first quarter of this year fell to the lowest since 2009, at 46.42 million units. Demand is lackluster because consumers worldwide replaced their TVs in droves during the pandemic and have yet to replace them. The TV replacement cycle comes every six years, according to industry insiders.
TV manufacturers are now scaling back orders after stocking up on panels ahead of the Euro Cup in June and the Paris Olympics in August, events that were expected to temporarily boost TV demand.
“Once the European sporting events are over, European TV demand will decline again,” said DSCC co-founder Bob O’Brien. “The display industry’s production capacity exceeds foreseeable future demand, and panel manufacturers will need to moderate production to minimize the downward price cycle in the second half of this year.”
Lower LCD TV panel prices in the third quarter are anticipated to ease the pressure on TV manufacturers such as Samsung Electronics and LG Electronics to procure raw materials. The sharp rise in TV panel prices in the first half of this year has negatively impacted the profitability of TV manufacturers. ”We are taking measures to minimize the impact on profitability due to rising LCD panel prices since the previous year,” LG Electronics said in its first-quarter earnings call.
“We do not expect panel prices to fall for long because Chinese panel makers are likely to tighten supply in response to such price declines,” said an industry insider.
