Prices of LED-Backlit LCD TVs expected to fall by 30% in 2H10 driven by the phenomenal growth in their shipments

As previously mentioned, the LED-backlit LCD TV will lead to a reshuffle in China’s color TV market, and China’s local brands have taken various measures, such as price cuts, in order to compete against foreign brands whose prices have already been reduced. Is it true that the price of the LED-backlit LCD TV will fall? Take the 42-inch Hisense LED-backlit LCD TV for example, its street price is around RMB 8,000, which is 30% more than that of the CCFL-backlit LCD TV, but the LED-backlit TV offers brighter color performance and 20%~30% lower power consumption than the latter. Meanwhile, as the price of the CCFL-backlit LCD TV falls, shipments of LCD TV will rise, and consumer acceptance of the product will soar. Naturally, there are distinct preferential differences in price and backlight technology among buyers in high-, mid-, and low-tier product segments.

Judging from the progress of the LED-backlit LCD TV three years since its initial launch, its popularization may be faster than that of CCFL-backlit LCD TV. In China, sales of LED-backlit LCD TV have already reached 10% of total TV sales, and both international and local brands demonstrate their strengths in their respective fields of expertise. Both direct-type backlight and edge-type backlight products highlight their performance in color and grey scale, as well as the ultra-slim bezel. Each has its own strengths and weaknesses, as well as its own target customers in the market. However, it is safe to say that the entire supply chain, including panel makers, brand vendors, LED chip makers, and packagers, benefits from the sale of LED-backlit LCD TV.

As for marketing activities, many brands, including Sony, Sharp, Samsung, Hisense, TCL, Haier, and Konka, have offered various giveaways to promote the sale of their LED-backlit LCD TVs in the China market. Typically, bigger brands offer better quality giveaways which are more attractive to customers.

According to the panel price survey conducted WitsView, a TFT-LCD industry research institute, for a large-sized LCD TV, there is still a considerable price gap between the LED-backlit panel and CCFL-backlit panel, though the gap is gradually narrowing.

Furthermore, according to the survey from LEDinside, each LED TV requires 300~400 LEDs on average. The annual capacity of one MOCVD system supplies about 200,000 LED-backlit LCD TV units. Therefore, it takes the capacity of 150 MOCVD systems to produce 30 million LED TVs. In 2009, 260 units of MOCVD equipment were shipped, and the figure may reach 500 units in 2010, especially with the aggressive capacity expansion from China.

However, taking the yield rate into consideration, the expanded capacity can not be fully allocated to the production of LED TVs. The significant capacity expansion will raise uncertainties about supply and demand of the LED industry in the latter half of 2010, that is, industry players will be closely monitoring the price of LED components.