Turn off the large-size LCD panel line, Samsung to "one stone three birds"?
A few days ago, seeing a news, Samsung announced that it will close the G7 LCD panel production line at the end of this year. It is reported that this production line accounts for 4% of the global large-size panel production capacity and is the largest factory closed in the history of panel manufacturing.
The news came a bit too suddenly. After entering the second quarter, the demand for LCD panels tended to be strong, especially the demand for large-size panels in the market was even more urgent. At this point, Samsung chose to reduce its production capacity. What are the intentions?
Large size panel demand
From the domestic market, the sales of large-size color TVs are relatively optimistic. According to a report issued by Yikang, a market research organization, the difference in TV size sales in the first half of 2016 has become increasingly apparent. The 32-inch share in medium and small size continues to shrink, with retail sales accounting for 19.8%, a year-on-year decrease of 25.6%, and 55-inch market share. Sales volume was first, with a share of 22.7%, a year-on-year increase of 61.2.
At present, large-size TV has become a new bright spot in the color TV market growth. In particular, TVs of both the 55-inch and 65-inch sizes have a market share of 22.7% and 3.8% in the January-June period of 2016, respectively. The 55-inch model surpassed 32 inches for four consecutive months, becoming the best-selling size in the first half of 2016, and its market share continued to increase. From 5.6% in 2012 to 22.7% in 2016, it was a rapid development.
Judging from the global panel supply trend, according to the latest IHS Markit “Monitoring of Supply and Demand for Devices and Devicesâ€, the demand for large-size panel applications is expected to increase by 5%-6% per year between 2016-2018; however, large-size panel production capacity is expected to increase in 2017. It will only increase by 1% and increase by 5% in 2018. Only in the second half of 2018, China will have more production capacity, including the world's first Gen 10.5 plant. The market is expected to become more relaxed again.
TV has rapidly entered the stage of large-screen display, and the demand for large-size LCD panels has been growing. Samsung closed a large-size panel production line, leading to a small increase of 1% in panel production capacity in 2017, which cannot keep up with the increase in demand. 5%-6%.
Attempts to raise the price of the panel
Many analysts believe that Samsung's move is intended to further raise the price of large-size LCD panels. After all, from the previous big environment, the lack of demand and oversupply caused the panel makers a very bad day.
Among the four companies with higher market share, Samsung Electronics, LGD, Taiwan Innolux and Taiwan AU Optronics, two Taiwanese companies have continued to lose money since Q4, and LGD’s operating profit also decreased by approximately 90% year-on-year. Samsung’s panel business last year’s Q4 profit fell to 300 billion won, down from 470 billion won in the same period last year. Taiwan's four major panel makers had an overall loss of more than RMB 3.6 billion in Q1 2016.
On the one hand, the overall market demand is weak, and on the other hand, the production capacity of BOC, China Star Optoelectronics, and other panel factories in China has been continuously released. This has led to a cyclical surplus of panel production capacity.
Since the second quarter of this year, the increase in demand and the reduction in production capacity have led to a gradual recovery of panel prices. Market regulation agency IHS announced the latest international market LCD TV panel price trend display, prices of multiple sizes of LCD panels rose. For example, from March to July, in the 4K ultra-high-definition panel, the maximum increase for the 49-inch UHD panel is 2 US dollars, the highest offer is 139 US dollars. 55-inch 4K ultra-high-definition panel, the maximum increase of 2 US dollars, the highest offer is 195 US dollars.
On the whole, although the panel price has gone up, but the increase is not large, Samsung chose to close a large-size panel line, reduce supply, and the intention to further increase the price is very obvious.
Ensure the advantages of color TV
The Samsung TV market has the largest market share in the world, but the Chinese color TV brand behind it cannot be underestimated. Hisense has already ranked among the top three in the world, and TCL and Skyworth are among the top five in the world.
However, Samsung has a huge advantage over Chinese brands in that it has a panel business and has opened up the most important supply chain system for color TVs. Although Samsung's panels are also supplied to external manufacturers including Chinese brands, the top-end products and technologies will still give priority to their own color TV products.
As the world's leading supplier of large-size LCD panels, Samsung has reduced its production capacity, and its impact will not only lift panel prices, but will also have an impact on the overall color TV market.
First of all, an increase in panel prices will increase overall machine costs, and the retail price of color TVs will increase further. If brands that fight price wars do not adjust their market strategies, they may intensify their losses and become more passive.
Secondly, the capacity reduction will lead to the delay in the product launch and external sales cycle of some TV brands. In the second half of the year, the market demand recovery trend is obvious, this situation is very unfavorable.
Finally, Samsung's color TV business may use this to further widen the gap with its business partners. After all, Samsung’s panel will further reduce its production capacity, and will not cause harm to Samsung’s color TV business, disrupting some of its opponent’s planned deployments and at the same time pulling up the panel and the whole machine. Prices, Samsung can be "one stone three birds."
A few days ago, seeing a news, Samsung announced that it will close the G7 LCD panel production line at the end of this year. It is reported that this production line accounts for 4% of the global large-size panel production capacity and is the largest factory closed in the history of panel manufacturing.
The news came a bit too suddenly. After entering the second quarter, the demand for LCD panels tended to be strong, especially the demand for large-size panels in the market was even more urgent. At this point, Samsung chose to reduce its production capacity. What are the intentions?
Large size panel demand
From the domestic market, the sales of large-size color TVs are relatively optimistic. According to a report issued by Yikang, a market research organization, the difference in TV size sales in the first half of 2016 has become increasingly apparent. The 32-inch share in medium and small size continues to shrink, with retail sales accounting for 19.8%, a year-on-year decrease of 25.6%, and 55-inch market share. Sales volume was first, with a share of 22.7%, a year-on-year increase of 61.2.
At present, large-size TV has become a new bright spot in the color TV market growth. In particular, TVs of both the 55-inch and 65-inch sizes have a market share of 22.7% and 3.8% in the January-June period of 2016, respectively. The 55-inch model surpassed 32 inches for four consecutive months, becoming the best-selling size in the first half of 2016, and its market share continued to increase. From 5.6% in 2012 to 22.7% in 2016, it was a rapid development.
Judging from the global panel supply trend, according to the latest IHS Markit “Monitoring of Supply and Demand for Devices and Devicesâ€, the demand for large-size panel applications is expected to increase by 5%-6% per year between 2016-2018; however, large-size panel production capacity is expected to increase in 2017. It will only increase by 1% and increase by 5% in 2018. Only in the second half of 2018, China will have more production capacity, including the world's first Gen 10.5 plant. The market is expected to become more relaxed again.
TV has rapidly entered the stage of large-screen display, and the demand for large-size LCD panels has been growing. Samsung closed a large-size panel production line, leading to a small increase of 1% in panel production capacity in 2017, which cannot keep up with the increase in demand. 5%-6%.
Attempts to raise the price of the panel
Many analysts believe that Samsung's move is intended to further raise the price of large-size LCD panels. After all, from the previous big environment, the lack of demand and oversupply caused the panel makers a very bad day.
Among the four companies with higher market share, Samsung Electronics, LGD, Taiwan Innolux and Taiwan AU Optronics, two Taiwanese companies have continued to lose money since Q4, and LGD’s operating profit also decreased by approximately 90% year-on-year. Samsung’s panel business last year’s Q4 profit fell to 300 billion won, down from 470 billion won in the same period last year. Taiwan's four major panel makers had an overall loss of more than RMB 3.6 billion in Q1 2016.
On the one hand, the overall market demand is weak, and on the other hand, the production capacity of BOC, China Star Optoelectronics, and other panel factories in China has been continuously released. This has led to a cyclical surplus of panel production capacity.
Since the second quarter of this year, the increase in demand and the reduction in production capacity have led to a gradual recovery of panel prices. Market regulation agency IHS announced the latest international market LCD TV panel price trend display, prices of multiple sizes of LCD panels rose. For example, from March to July, in the 4K ultra-high-definition panel, the maximum increase for the 49-inch UHD panel is 2 US dollars, the highest offer is 139 US dollars. 55-inch 4K ultra-high-definition panel, the maximum increase of 2 US dollars, the highest offer is 195 US dollars.
On the whole, although the panel price has gone up, but the increase is not large, Samsung chose to close a large-size panel line, reduce supply, and the intention to further increase the price is very obvious.
Ensure the advantages of color TV
The Samsung TV market has the largest market share in the world, but the Chinese color TV brand behind it cannot be underestimated. Hisense has already ranked among the top three in the world, and TCL and Skyworth are among the top five in the world.
However, Samsung has a huge advantage over Chinese brands in that it has a panel business and has opened up the most important supply chain system for color TVs. Although Samsung's panels are also supplied to external manufacturers including Chinese brands, the top-end products and technologies will still give priority to their own color TV products.
As the world's leading supplier of large-size LCD panels, Samsung has reduced its production capacity, and its impact will not only lift panel prices, but will also have an impact on the overall color TV market.
First of all, an increase in panel prices will increase overall machine costs, and the retail price of color TVs will increase further. If brands that fight price wars do not adjust their market strategies, they may intensify their losses and become more passive.
Secondly, the capacity reduction will lead to the delay in the product launch and external sales cycle of some TV brands. In the second half of the year, the market demand recovery trend is obvious, this situation is very unfavorable.
Finally, Samsung's color TV business may use this to further widen the gap with its business partners. After all, Samsung’s panel will further reduce its production capacity, and will not cause harm to Samsung’s color TV business, disrupting some of its opponent’s planned deployments and at the same time pulling up the panel and the whole machine. Prices, Samsung can be "one stone three birds."
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