Quotes for 32-Inch LCD TV Panels Expected to Rise Above Cash Costs in Second Quarter as Suppliers Labor to Turn a Profit, Says TrendForce

The size category that currently makes up the largest share of the LCD TV panel shipments is the 32 inches. Since the second half of 2015, quotes for this size have been on a slide due to a generally weak market. Furthermore, the price decline of the 32-inch TV panels has put pressure on prices and margins for panels of other sizes, thus becoming a heavy burden on the suppliers. However, there are indications that the supply-demand situation of the 32-inch is gradually moving towards a balance. Japanese panel makers plan to stop their production while counterparts based in South Korean are also scaling back. As suppliers try to tighten up the market supply, the prices of the 32-inch panels are expected to stabilize and even rebound in the near future.

According to its latest Monitor & LCD TV Panel Cost Breakdown Report, WitsView, a division of TrendForce, finds that the average quote for 32-inch Open-Cell (OC) panels in the first quarter of this year arrived at US$51~52 per piece, lower than the product’s average cash cost of US$52~53 per piece. With the price of the 32-inch touching the bottom and dipping below cost, panel makers faced a substantial squeeze on their profits.

WitsView also reports that panel makers plan to progressively scale back their 32-inch production in the second quarter and shift their capacities to other panel sizes. As they restrict the market supply, the 32-inch prices are expected to stabilize and may even rebound to US$53~54 per piece. The average cash cost of 32-inch OC panels is also projected to drop to US$50~51 per piece over the same period, so panel makers will have a chance to turn a profit.

Optimizing cost structures is crucial for panel makers as prices determine their product mixes

The production of the 32-inch TV panels has reached the maturity stage with panel makers maintaining high and stable yield rates. Besides being the main size category for Chinese suppliers, the 32-inch also provides a means to adjust capacity utilization for Taiwanese and South Korean suppliers. BOE Technology and China Star Optoelectronics Technology, the two major suppliers of this product, suffered revenue losses in the first quarter. While the price trend of the 32-inch TV panels was not the sole cause of their poor performances during the period, it was still a significant contributing factor.

WitsView points out that panel makers will try to raise the prices of the 32-inch panels as to keep prices steady for products of other sizes. Therefore, optimizing cost structures will be crucial to their efforts. This currently can be achieved by improving design technology and lowering the costs of upstream materials and components. For instance, panel makers may be able to compel upstream suppliers to cut prices of glass substrates and polarizers by 2~3% through effective bargaining. Another cost-saving measure would be to accelerate the adoption of Gate-on-Array design in the manufacturing of panels to reduce driver IC usage.