LEDinside: Concerns of high LED inventory; Japan’s orders will spur the next wave of LED industry growth

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Recently, panel manufacturers have been concerned about the excess inventory, triggering uncertainty toward demand for LED TV backlight. LEDinside’s survey showed that Korean panel vendors have started to save LED inventory since the end of 2009. Therefore, when facing the slack season, they hit the brake for LED procurement in advance. Taiwan-based panel manufacturers have formally adopted large quantities of LED backlight products; AUO is the fastest of all at this stage, creating short supply for its LED plant Lextar.

According to LEDinside, an LED industry research division of TrendForce, Japanese TV brand vendors have come to Taiwan to seek LED material sources. Whether Taiwan’s LED manufacturers will successfully join in the supply chain of TV brand vendors of Japan and China will be the key for Taiwan's LED industry to break a new record.
 
As for the Chimei Group, Chi Mei and Innolux require more integration, thus affecting the progress of LED TV backlight in 2010. Most of the Taiwanese manufacturers are in its initial stage, and the LED backlight module vendors indicated that their current inventory is at a safe level.

According to survey from research institute WitsView, the current panel and set inventory remains at more than four weeks, resulting in a great decline in CCFL panel price, making panel manufacturers hold a more conservative attitude towards LED backlight products. Whether it will affect the penetration rate of LED backlight products remains to be seen.
 
The shipment target for Samsung LED-backlit TV is very aggressive in 2010. Samsung Group saw LED as an important key component; therefore, they have been actively preparing the materials since the end of 2009. However, the retail price of LED-backlit TV is still high, which made end-market sales lower than expected in the first half of 2010. In addition, due to concerns of excessive panel inventory, Samsung’s product pull-in started to slow down at the beginning of Q1, and recently began to adjust its inventory.
 
After Samsung’s LED- backlit TV have successfully open up a market in 2009, other TV brand manufacturers are actively planning to implement LED-backlit TV. Nevertheless, to date, most manufacturers, including Sharp and Sony, are still behind schedule.
 
According to WitsView’s survey, in terms of procurement volume of panels in the China TV market in the last three quarters, it has decreased gradually. Especially, in the second quarter this year, the procurement volume of panels was only 64 million, and it dropped by 15 percent compared to the first quart this year. Despite the inventory problem, the international competitors, like Samsung and Sony, launched aggressive price promotion as well, and cast substantial pressure on Chinese TV brand vendors. Moreover, Taiwan LED companies are eager to enter the China TV supply chain, and even continue increasing shipment. However, under the pressure of price promotion from International companies, it remains uncertain whether the weak sales of China TV products will affect the LED industry in the future.

In terms of panel makers’ inventory, apart from Samsung, other companies’ progress of launching LED TV, including those of China and Japan, still lag far behind; even Japanese brand vendors are actively seeking sources of LED materials in Taiwan.

Perspectives from LEDinside:
Concerns of excess panel inventory, coupled with the lower-than-expected sales performance of LED TV in the first half of the year, led to high uncertainty in the LED industry in the latter half of the year. LEDinside indicated that, in addition to obtaining orders from Korea companies, securing orders from other companies is the key for LED companies to reach their sales targets in the upcoming months, especially during China’s National Day holiday and Christmas season.