TrendForce：Declining Demand and Rising Inventory Add Uncertainties to the Q1’13 Market

According to the survey of China’s top 6 TV brands’ set shipment and panel procurement conducted by WitsView, the display research division of TrendForce, and its Chinese partner Σintell, November showed the second-largest monthly shipment of the year after the peak in September. The LCD TV shipment was 5.225 million units in November, growing 17% MoM, and the December shipment is projected to be 5.5 million units. Supported by Chinese officials’ favorable policies, the 2012 LCD TV shipment will top the benchmark of 50 million units. The total November panel procurement was also higher than expected, attained 6.726 million units, and saw a 25% MoM growth, setting a new record of historical high. 
 
WitsView’s research director Burrell Liu said that China top 6 TV brands’ November shipment and panel procurement were lifted by the factors as follows: 1. the restocking for Chinese New Year was advanced; 2. the psychological expectation of panel changes resulted in overstocking. The overall inventory level continued to climb to 7.4 weeks, slightly high, and certain brands’ inventory even surpassed 8 weeks, showing climbing risks. 

Until November, top 6 brands’ ranking and market shares are: TCL(25.3%) / Hisense(20.8%) / Skyworth(17.5%) / Konka(14.3%) / Changhong(12%) / Haier(10.1%). The ranking and market shares of panel makers by shipment for China top 6 brands are: CMI(27.7%) / AUO(19.5%) / LGD(17.6%) / SDC(12.1%). China’s CSOT has made its breakthrough and enjoyed a 10.5% market share while BOE showed an aggressive presence of 9% market share (figure 1).


Source：WitsView

Based on the data of China top 6 brands’ panel procurement and set shipment from July to December 2012, WitsView has observed that the panel supply was 31.4M, the set shipment was 29.5M, and the supply-demand ratio was around 6.3%, which was balanced to tight. In view of the Q4 number, the panel supply was 18.3M, the set shipment was 15.1M, and the panel supply-demand ratio was 21.1%, much higher than the 5% balance, indicating brands’ clear overstocking. As the inventory has surged rapidly in Q4, the sales during the Chinese New Year will play an extremely important role.

From the perspective of supply-demand situation by sizes in Q4, the supply-demand ratio for the 50” and above was 44%, 44.9% for the 39”, and 28.3% for the 32”. As the penetration rate of 32” was around 40%, the supply glut of this size was significant and will bring substantial impacts to the following price changes (figure 2). The penetration rate of 39”was only 8-10%, although Chinese brands’ supply-demand ratio for this size was slightly high on limited supply, the demand for this product remained and was strong, and the overstocking for this size continued. The supply-demand ratio for 42” was only 10.4%, but panel makers have started to increase productions including 42” and 21.5”-23.6”in 8.5G fabs by MMG(multi model glass), the following supply-demand changes for 42” should be watched cautiously. 


Source：WitsView
 
WitsView indicates that since 2008 China’s related stimulus policies came one after another to expand domestic demands, although Chinese brands have only accounted for 20% of the global market, the announcement of policies that support the TFT-LCD market cannot be overlooked. When facing the weakening global macro economy, the panel industry’s operation will influence the sensitive price nerves. With the market entering the slow season, if another panel industry peak can be activated in 2013 depends on panel makers’ strategies and wisdom.