In May this year, under greater inventory pressure, TV panel prices fell faster than expected, which caused great panic for panel manufacturers. The sharp drop in overall prices in May surprised the industry.
According to IHS analysis, due to the following reasons, the current TV panel market has become quite conservative.
1. At the end of May this year, the United States plans to impose a 25% tariff on Chinese-made TV sets, which has affected the demand of American retailers. Now is the peak sales season and retailers are looking for alternatives in case tariffs take effect.
2. Demand for the World Cup seems weaker than expected. Some TV manufacturers have lowered their shipment expectations for the second quarter to adjust their inventory.
3. Chinese TV manufacturers maintained high panel inventory at the end of April. Therefore, they will have to manage panel purchases carefully, and may cause panel manufacturers to lower prices. For Chinese TV manufacturers, the upcoming 618 promotions are crucial.
4. Most panel manufacturers have decided to maintain production capacity in the second quarter to maintain cost competitiveness, because sharply declining panel prices have severely eroded profits.
5. BOE's 10.5 generation line can already produce 65-inch panels, and more than 10 TV manufacturers have been qualified to purchase panels. Some TV manufacturers use this as a bargaining chip in price negotiations, although BOE's 10.5 generation line Production capacity has not been fully released.
6. In order to clear inventory, TV manufacturers are pricing TVs at a lower price, so they require panel manufacturers to make more price concessions in the second quarter.
At the same time, it is worth noting that the demand of some TV manufacturers is growing, especially China's low-end TV manufacturers, who have been negotiating with panel manufacturers in recent months to obtain certain "special" prices . Psychological warfare plays an important role in the negotiations. In order to encourage Chinese low-end TV manufacturers to refill demand, panel manufacturers have provided them with price protection during the Q2 or Q3 period to support their ambitions to drive shipments.
According to the panel prices required by TV manufacturers, it is far below the lowest point of the previous cycle and will set a new record low. IHS does not expect any panel manufacturer to overcome financial losses. It is worth noting how exactly panel manufacturers responded when they were in deficit in the second quarter. They may be forced to adjust factory utilization rates, rearrange production capacity, or simply lower prices to launch panels, so the risk of a sudden supply chain interruption cannot be ignored. The price war between 65-inch LCD TV manufacturers has begun, the lower? Market sales prices may affect sales in the second half of 2018. In addition, if the US tariff issue is resolved, US retailers may have to resume demand in the second quarter.
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