WitsView: Shipment and panel procurement by the top six TV brands in China continued to decline by 1.7% and 4.3% in June

According to the report of complete unit shipment in June published by WitsView, the panel research arm of TrendForce, and Σintell, the shipment of complete TV unit continued to decline in June 2011, the monthly decline was 1.7%, the total shipment was 2.598 million units; panel procurement also dropped 4.3% relative to May's, this was a repeated decline since the monthly decline in February, the total panel demand was 3.04 million units.

(1) Overview of shipment in the first half of the year and in June by the top six brands

Burrell Liu, research Director of WitsView, indicated that it's about 43M according to the annual shipment plan by China's top six brands and the total estimates, however, WitsView's estimate of shipment by the top six brands was only 38-39 M, the total demand of LCD TV in the China region was about 41-42M. Judging from the total shipments by the top six brands in the first half of the year, total shipment was about 15.42 million units. The top three were Hisense, TCL, and Skyworth, at market shares of 22%, 21%, and 20%, respectively; Haier ranked last at a share of less than 10%. The shipment ratio of LED TV in the first half of the year accounted for 39% of its total shipment, it's estimated that the penetration rate of the Chinese brand LED TV was about 47%.

(2) Usage overview of panel procured by the top six brands in the first half of the year and in June

The panel shipment of CMI accounted for 31% of the top six brands in June, its market share ranked first for two consecutive months, up 39% YoY, up 0.6% MoM. LGD ranked second at 27%, up 2% MoM; the market shares of Samsung and AUO ranked third and fourth at 21% and 17%, respectively. Table 1 shows the ratio of panel manufacturers among the top six brands in the first half of the year, CMI and LGD both ranked first at a 29%, SEC and AUO accounted for 19% and 17%, respectively, the ratios from both sides showed a fifty-fifty split, its obvious the Taiwanese manufacturers did not have much of a business advantage. In addition, panel production lines for large-sized TV in China came out one after another, panel manufacturers in Taiwan needs a careful evaluation of their follow-up, long-term business strategies.

The global demand of complete LCD TV was worsened by problems such as the 311 Japanese earthquake, the Greece credit, the skyrocketing of the crude oil prices, global inflation, etc, thus lowering consumer confidence; this coupled with the rise of the tablet PC have crowded out the strength of consumer spending in other products. The global demand for LCD TV has been adjusted downward repeatedly, WitsView estimated annual W/W demand will be adjusted to 201-203 M, the market share of the top 10 W/W LCD TV brands is around 74-75% (Table 2).

Conclusion

Shipment by China's top six brands declined in two consecutive months, the primary causes were the digestion of inventory by the distribution channels, coupled with the weak demand in the low season, the brand shipment was blocked. The replenishment of panel inventory in May and June and the advance stocking at the top six brands raised the level of panel inventory quickly to around six weeks, the panel inventory levels at certain brands have exceeded the warning level for the low season, it's estimated that the panel usage will be adjusted downward in July, this coupled with the international brands adjusting their annual plan downward have once again indicated that the demand for LCD TV in the third quarter remains flat.

Thus, the short-term strategy and the top priority is that the panel manufacturers must control their production capacity effectively to suppress the continued imbalance in supply and demand. It will also have an encouraging effect to stabilize the follow-up panel prices. In the future, the panel manufacturers in Korea and China (BOE/CSOT, etc.) not only have great assistance from their governments to continue expanding their production capacity, but they also have strategic cooperation of co-branding and their own brands to assist them in expanding their market shares, (for example: strategic alliance between Samsung and Sony for Sony, and LGE and Philips for LGD, etc., and the panel manufacturers in China has the Chinese domestic brands as their outgoing seaports). In the future, in order to develop a close and stable cooperation and branding strategy as the business guidelines, Taiwanese panel manufacturers should carefully evaluate their long-term strategic directions.

Table 1: Panel procurement ratios of China's top six brands, the first half year of 2011

Table 2: 2011 annual plan estimates by the top 10 W/W LCD TV brands