WitsView: Taiwan SI LCD TV shipments expected to grow 6~9% in 4Q11; market share in 2012 to rise to 27~28%

11 November 2011 Display

Global consumer spending and corporate profitability have been deeply affected by Japan’s earthquake in Mar 2011, inflationary pressures, worsening credit crisis in Europe and the US and tightening of capital towards small to medium sized enterprises by the Bank of China. The overall LCD TV market supply chain is expected to encounter mounting difficulties in the forthcoming future, mainly due to the above factors as well as factors including the scheduled end of both China’s home appliance subsidy program in rural areas next year and Japan’s consumer voucher program , moreover the global surge of TV replacement, originally spurred by the analog to digital TV conversion, also drawing to a close,

According to WitsView’s market data on its LCD TV brand vendors and TV SI makers indicates that the total global LCD TV shipments in 2011 will reach roughly 201 million units, up by 7% YoY. For 2012, the aggregated LCD TV shipment is currently forecast to hit 221.5 million units, up by 10% YoY. Taiwan’s TV SI shipments are expected to reach 45 million units in 2011, accounting for 22.4% of the worldwide market. This figure is projected to grow to 60~62 million in 2012, further increasing their global market share to 27~28% (Table 1).

Global LCD TV shipments increased by 19% QoQ in 3Q11; 10~13% quarterly growth projected for 4Q11
WitsView research director Burrell Liu indicated that the credit crisis in Europe and the US has been a key reason behind the conservative shipment figures posted by global LCD TV brand vendors in the first half of 2011. Despite a 19% quarterly shipment growth in 3Q11, the positive effect on the overall panel supply chain will be limited, as the brand vendors decreased their annual shipments for 2011. In 4Q11, with the Chinese Lunar New Year not too far away, global LCD TV shipments is expected to grow by 10~13% QoQ.
In terms of the major vendors’ performance in 2011, Sharp mostly concentrated its sales in the Japan market. Meanwhile, Toshiba witnessed weakening sales this year, where it focused mainly in Japan and Europe. Sony, has sales regions across Europe, US and Japan, However, the regions’ sluggish demand, Sony’s slow marketing strategy responses have both taken toll on its financial results and rendered its annual shipment target decrease to 20 million units, a whopping 7% decrease from the original forecast.

Turning to Panasonic, due to the procurement of Sanyo, it has boosted its overall market share. However, from a different perspective, it has also created more profit pressures. Aside from planning to sell its G6 TFT-LCD production line located in Japan’s Mobara, Panasonic will also scale back its G8.5 production output. It has yet to be seen, in terms of how it will adjust its future direction in the LCD TV market. On the other hand, as Philips focuses mainly in the Europe market, it was also hit by the Europe credit crisis. As for Vizio, since some changes may occur in the cooperation with LGD, coupled by the sluggish North America market conditions, Vizio’s annual unit sales drop in 2011 has been significant. Finally, backed by strong resources, China’s brand vendors were able to maintain an annual shipment growth of 17~18% for 2011. Their share will likely reach 19~20% in 2011. For 2012, it may even jump to 30% (Table 2).

Due to brand vendors’ declining demand, and rising in-house production among some vendors, Taiwan’s TV SIs posted a 5.2% quarterly decline in 3Q11. Fortunately, due to their effective inventory clearing and brand vendors’ “last-ditch” efforts to boost sales during the year-end, Taiwan’s TV SI shipments may increase by 6~9% QoQ in 4Q11. On an annual basis, TPV is expected to remain as the No. 1 leader. If it successfully takes control of the Philips brand next year, shipments may reach the 20 million mark in 2012. Meanwhile, Foxconn and Wistron will unlikely achieve their respective 2011 shipment targets, due to Sony’s lower TV demand. Growth for next year is also expected to be modest. Compal, Unihan and Briview, have also seen shipments decline sharply. The drop is attributed to the fact that their main client is Toshiba. As Toshiba focuses mainly in Europe and Japan, the earthquake and economic slowdown in Europe has been particularly damaging to the three SIs’ performance. As for Amtran, Vizio’s weaker TV sales have prevented the SI from reaching its target, as well. All in all, despite the orders provided by Philips, Sony, Toshiba, Vizio and some in-house brands, Taiwan’s SIs have still been substantially impacted by the deteriorating macro-economic environment.

Conclusion
Looking into 2012, the LCD TV market remains mired in a downtrend. Although panel prices may hit bottom in 4Q11, the supply glut will still be at 15~20%. Thus, panel makers must cautiously handle the oversupply problem. As both Korea and China are backed by their own TV brands, it is imperative that Taiwan panel makers carefully devise on how to sustain their future businesses. Perhaps brand vendors who have no in-house panel support are the best candidates for cooperation. In addition, the rising power of China’s Tier 2 and Tier 3 SI makers (such as Shenzhen MTC, KTC, Teinuro, and HKC) and the fact that Samsung and LG and China’s various LCD TV brand vendors mostly rely on themselves in building their LCD TVs (production ratio roughly at 90~95%), Taiwan’s SIs, who rely heavily on Japan vendors, will face even stiffer competition, as more players try to grab a piece of the pie in the TV SI market.

Table 1: 2011 and 2012 Global and Taiwan main TV Sis’ annual shipment target (unit: million-Pcs)

Source: WitsView