WitsView: Cost competitiveness of LED TV has been in place waiting for stimulation by aggressive price strategy. Enhanced penetration in second half of the year can be expected
According to the observation on LED backlight models by the research institute WitsView under TrendForce, along with the mass production of new LED backlight models among panel makers using new backlight design structure in 1Q11, the cost gap between CCFL models and LED backlight models have been dramatically reduced. The cost gaps between backlight modules of LED TV panels and CCFL TV panels at traditional 450nits brightness specifications for 32”W and 42”W products have been greatly reduced to $42 and $62 in 2Q11 from $66 and $97 in 1Q10. In addition, for rapid popularization of LED TV, panel makers have started mass production of combat models with low-end specifications at 380nits brightness with only two light bars along single long side. This way the cost gaps of backlight modules for 32”W and 42”W products can be further reduced by 40~60% to $26 and $40.
Although the cost gap has been greatly reduced, continuously weaken end demand has led to weaker-than-expected demand for LED TV in first half of 2011. All vendors have begun to modify their optimistic outlook of LED TV penetration rate in 2011. Based on the observation by WitsView, there is still chance for the demand for LED TV to gradually heat up under recent atmosphere of rising TV panel price among panel makers. First of all, the cost competitiveness of LED TV has been in place after adopting new backlight design. Once the prices of TV panels begin to rise, WitsView thinks panel makers will adopt the strategy of allowing prices of CCFL models to rebound first while keeping prices of LED models remained unchanged. This way the price gap between CCFL and LED models can be reduced to stimulate the willingness among downstream customers to switch from CCFL models to LED models. Take 32”W and 42”W products as an example, with the prediction of LED combat model becoming main stream product with greatly converged cost gap of its backlight module components, panel makers will be able to adopt more active attitude towards LED TV panel price such that the penetration rate of LED TV can have a chance to be significantly improved when hot season arrives.
Figure: 32” & 42” BLU cost gap of CCFL & LED Model
On the other hand, LED supplying subsidiaries of main panel makers began installations of new MOCVD machines since Q3 in 2010. However, the actual implemented production capacity has been rather limited due to shortages of sapphire substrates and MO gases. With the relief of raw material shortage, LED supplier must activate their MOCVDs gradually leading to greatly increased production capacity on supply side. While short-term lighting market remains unclear, panel makers must focus more on LED backlight market in order to utilize LED production capacity of their subsidiaries which can be helpful to the enhancement of LED TV penetration rate.
Therefore, WitsView has been consistent with the point of view with respect to LED TV product penetration rate at the beginning of this year, where the enhancement of penetration rate in first half of 2011 is rather not obvious because panel makers are at initial stage of mass production of new LED models and end demand has still been weak. However, in second half of this year with coming hot season, LED TV demand can be expected to heat up. The overall LED TV product penetration rate in the entire 2011 is predicted to reach 43%.
