Chinese ODMs Have Rapidly Risen to Prominence as Competition for Panel Supply Becomes Critical, TrendForce Reports

• BOEVT's annual ODM TV shipments are targeted to grow by 85% in 2017.

• Foxconn's ODM TV shipments expand owing to the vertical integration of Sharp's panel manufacturing and branded TV set business.

• China's share of the global TV panel shipments is projected to reach at least 33% in 2017.

This year's top four LCD TV ODMs by their target shipments in order will be TCL, TPV, Foxconn and BOE Vision-Electronic Technology (BOEVT), according to the preliminary estimation by WitsView, a division of TrendForce. The fourth-place BOEVT in particular has emerged as a major pure ODM by taking advantage of the vast panel supply provided by its group company BOE Technology (BOE). Furthermore, BOEVT will be taking on U.S.-based VIZIO as its client for the first time in the second half of this year. The collaboration between the two companies indicates that Chinese ODMs are starting to play a bigger role in the global TV supply chain.

Chinese TV ODMs benefit from the huge and growing production capacity of the domestic panel industry

WitsView's latest analysis finds that the global top four TV ODMs for 2017 are all expected to post annual shipment growth. The leader TCL's annual shipments are targeted at 22 million units. Second-place TPV and third-place Foxconn are set to ship 20 million and 13 million units, respectively for the year. The target annual shipments of fourth-place BOEVT are projected around 12 million units, representing a massive growth of 85% compared with its 2016 volume of 6.5 million units.

BOEVT's whole TV sets have been mainly using 32-inch LCD panels as BOE is the world's major panel supplier for this size category. However, BOEVT will be able to further diversify its portfolio in the second half of this year, when BOE begins to roll out 43-inch panels from its new Gen-8.5 fab in Fuzhou, China.

In terms of client base, BOEVT's primary clients have been the two leading TV brands Samsung and LG Electronics. In the second half of this year, the Chinese ODM will also receive orders from VIZIO, which has mainly worked with Taiwanese ODMs. VIZIO's decision to collaborate with BOEVT shows that global electronic brands are starting to acknowledge Chinese ODMs' ability to meet their production standards.

Foxconn expands ODM TV shipments via the vertical integration of Sharp's panel capacity and branded TV set business

WitsView points out that BOEVT's rise is closely related to the support provided by the group company/panel supplier BOE. Similarly, TCL and Foxconn have recognized the importance of in-house panel supply to the TV ODM business. TCL has China Star Optoelectronics Technology (CSOT) as its in-house panel supplier. As for Foxconn, its TV ODM business, which already benefits from its relationship with Innolux, is growing even bigger with the incorporation of Sharp. In addition to orders from SONY and other clients, Foxconn's ODM TV shipments are also increasing thanks to the demand for Sharp-branded TV sets in China.

Chinese ODMs have become more competitive on account of vertical integration

At present, more than 60% of the total production cost of a LCD TV set is related to its panel. Major ODMs are therefore compelled to secure their panel supply sources via vertical integration. China’s ballooning share of global TV panel shipments, which is projected to reach at least 33% this year, is in great part attributed to the rapid expansion and integration of its domestic panel industry. Going forward, Chinese panel makers intend to raise their production capacity to new highs. CEC-Panda has scheduled the building of two Gen-8.6 fabs before 2019. BOE and CSOT will each have a new Gen-10.5 fab in operation as well by that year. These four fabs of advanced generations will make an immense contribution to the overall TV panel capacity. In sum, WitsView foresees that China will play a larger role in the global panel supply and TV ODM business in the future as the process of vertical integration continues.