TV panel price avalanche When will it hit the cost line?

Core reminder: After entering the third quarter, LCD TV panel prices began to see an avalanche phenomenon, and the price began to decline from the original estimate for the fourth quarter, about a quarter earlier. Judging from the recent decline in TV panel prices in August and September, the decline is not only large but also fast. It can be said to be a panic plunge. When will the future decline end? Or how does the trend change? Has become the focus of industry attention.
After entering the third quarter, LCD TV panel prices began to see an avalanche phenomenon, and the price began to decline from the original estimate for the fourth quarter, about a quarter earlier. Judging from the recent decline in TV panel prices in August and September, the decline is not only large but also fast. It can be said to be a panic plunge. When will the future decline end? Or how does the trend change? Has become the focus of industry attention.

Different from the previous LCD cycle, the factors behind this wave of TV panel prices are quite complicated. Among them, the changes in the epidemic play a very important role. Due to the epidemic, the panel prices have maintained a surge for more than a year. The length of the price increase and the magnitude of the price increase are unprecedented.

In terms of the price increase of this wave, it is about 100~180%. This situation makes the panel factory full of pockets and makes a lot of money. However, in the TV brand factory, although there is an increase in the sales of terminal products, However, the price increase is only about 30-50%, which is far behind the increase of the panel, which puts pressure on the terminal brand operators.

Judging from the financial reports of the world’s major panel makers in the first half of the year, only four small and medium-sized companies, including Hehui Optoelectronics, Huaying Technology, Visionox, and Lingju, have suffered losses, but strictly speaking, Hehui Optoelectronics and Visionox It is mainly based on OLED panels, so the only manufacturers that really lose money in the LCD field are Huaying Technology and Lingju.

As for other companies including BOE, TCL China Star, Tianma, Longteng, Rainbow, Samsung Display, LG Display, and AUO, Innolux, Caijing, etc., they are all making big profits.

However, in addition to the big profits of the world’s major panel makers, a large number of TV brand manufacturers are at a loss. For the Chinese TV brand manufacturers in the first half of 2021, they have hardly made any money. The top 7 brands have an average loss of RMB About 200 million yuan, it is obvious that the uneven distribution of profits in the overall industry chain is quite obvious.

With the uneven distribution of profits in the industry chain, TV demand in the terminal market is declining, making the overall market situation worse. The demand for the Chinese TV market in 2021 has been sluggish, and the annual TV scale is estimated to be less than 38 million units.

As for the European and American markets, due to the escalation of the housing economy and sports events, the previous demand may have been overdrawn in advance, but now that the vaccine is gradually popularized, the demand for TV in developed countries is gradually weakening, which is important for the lack of strong panel demand reason.

In addition, problems such as freight congestion, rising transportation costs, and unsuccessful supply chains are also the reasons why TV manufacturers are unwilling to pull cargo panels, because even after waiting for one or two ICs that are out of material, they are assembled. TVs, because they are stuck in ports or floating at sea, may not be able to be delivered to the terminal channels in real time, but once a large number of panels are purchased, they may become inventory. This is the TV industry players are not willing to watch To the situation.

In fact, most TV brand owners adopted the practice of reducing the number of panel purchases in the third quarter. This change in peak season not only transformed TV panels from a seller’s market to a buyer’s market, but also led to a sharp drop in prices.

In August alone, according to Omdia's survey, the price of 32-inch panels fell sharply by US$15, 43-inch panels fell by US$19, 50- and 55-inch panels fell by US$23 to 25, and 65-inch panels fell by US$29, on average. The drop was as high as 10-15%. After entering September, according to Qunzhi Consulting's estimation, the price of each size panel will fall by 9 to 13 US dollars, and the double-digit decline is almost revised downward. In response to the sharp decline in the price of TV panels, in addition to agreeing to cut prices, panel makers also provided partial discounts to keep a certain amount of panel purchases or long-term contracts, but it may be difficult to stop the panel in the second half of 2021. Downtrend, the industry expects that TV panel prices are likely to fall all the way to the end of the year.

As a result, this wave of panel price declines, is it possible to drop to the historical low point in November 2019 or return to the low point of the previous wave of LCD cycles in May 2020? This has to be seen from the cost line of current TV panel prices.

According to DSCC data, the total cost of the 32-inch HD panel in the fourth quarter of 2021 is about 43 U.S. dollars, and the cash cost is estimated to be 41 U.S. dollars. The panel price is estimated to be 55 U.S. dollars at that time; as for the total cost of the 65-inch UHD panel in the fourth quarter. It is 213 US dollars, the cash cost is 174 US dollars, the panel price at that time is 223 US dollars.

In other words, by the fourth quarter of 2021, mainstream LCD TV panel quotations will still be higher than the cost line of panel manufacturers. In other words, even though the current LCD TV panel prices are falling sharply and rapidly, it will not be until the end of 2021. The factory can still keep profit.

However, after entering 2022, there are still many variables in the panel market, including demand, shipping, inventory, lack of materials and other intertwined factors. If the changes in the overall economy and trade war are also added, it will cause The overall market conditions have become more complicated, and these will affect the price trend of the panel. It is not ruled out that there is the possibility of further decline, but it still needs time to observe.

However, from the perspective of the structural transformation of the panel industry, it has become a fact that Korean panel makers are gradually withdrawing from the supply of LCD TV panels, while Chinese panel makers can already dominate the global LCD TV panel production and shipments, and Chinese manufacturers can dominate. Under the circumstance of, the significance of seizing market share is no longer significant. It is estimated that excessive bargaining competition between manufacturers will be controlled, which will give a certain degree of confidence and protection for future panel price trends.