A new report from IHS Technology reveals an unexpected growth in sales of LCD TV panels in the first half of this year, which is linked primarily to the World Cup.
Global LCD TV panel shipments during the first six months of 2014 rose 3 percent from the same period a year ago. Although growth this year was much less than the 9 percent expansion logged during the first six months of 2013, achieving any increase at all was surprising to industry watchers.
According to Ricky Park, director for large displays at IHS, the television industry was doubtful about any increase in shipments during this period, considering the discouraging market indications earlier in the year.
Among the variables driving the sales, the World Cup received the most credit, with the event boosting demand for televisions, especially in Europe and South America. Sports extravaganzas have long been reliable drivers of television sales, and by extension, the LCD TV panels that make up the sets.
In addition to the sporting event, various other factors also kicked in, helping to create an overall favourable environment for the global LCD TV trade in the first half of 2014. These included signs of a continuing economic recovery in North America, one of the world’s two largest markets for LCD TVs alongside China; a subsidy program initiated by the Mexican government for its citizens to buy new LCD TVs; and the continued phasing out of bulky, tube-type analogue televisions, now obsolete in many areas of the world.
Strong demand blunted by production problems
Despite the stronger-than-expected demand for the January to June period, a drop in yields and a loss in capacity due to production line modifications caused a shortage of supply of LCD TVs. The effects were felt especially in the ultra-high-definition television (UHD TV) segment of the industry. With four times the resolution of 1080p sets, UHD TVs are priced far higher than conventional high-definition television models.
The production method known as multi-model on a glass (MMG) also faced low production efficiencies resulting in reduced capacity, especially in the advanced production lines for eighth-generation fabs.
Additionally, a growing share of the manufacturing base that once had enjoyed maximised glass efficiency - lines producing TV panels in sizes of 39.5, 42.5, 48 and 48.5 inches - experienced deteriorating yields.
IHS believes production issues of a different nature are likely to occur in the second half, extending current manufacturing woes. A substantial loss in production capacity is expected during the remainder of the year because panel makers in China and Taiwan are slated to use different electrode materials from those currently deployed, ostensibly to improve their UHD products.
Change afoot at Korean suppliers Samsung Display and LG Display
Samsung Display will reduce the thickness of its front-pane glass to 0.5mm as the company increases the production of curved TVs. LG Display is converting part of an eighth-generation line to oxide thin-film transistor technology to produce OLED panels, a rival technology to UHD LCDs that the maker hopes will start picking up among consumers.
TV prices are not expected to dip in the coming months in spite of the ongoing production problems, which will serve to constrict the supply of LCD TVs.
These findings are available in the report titled, ‘LCD Supply and Demand Market Tracker – Q2 2014’ from the Displays service of IHS Technology.