South Korean TV makers Samsung and LG will face rising costs ahead of the peak sales season later this year. Chinese LCD panel makers have notified customers of price increases. As a result, people are beginning to have reason to worry that China’s dominance in the LCD panel supply chain will allow local companies to influence prices.
according to electric power companyBOE, TCL China Star Optoelectronics Technology (TCL China Star), and Huike Display Technology recently issued LCD panel price adjustment notices to customers. They are favored by major TV manufacturers such as Samsung Electronics, LG Electronics and Sony. BOE will launch new prices in the fourth quarter, while TCL CSOT and HKC will increase the prices of some products in September.
The price increases come as TV makers prepare for a surge in sales later this year. Typically, from August to September, companies such as Samsung and LG start purchasing parts and increasing production in order to sell during Black Friday and Christmas. Therefore, they will not be able to significantly reduce the purchase of LCD panels.
At the same time, there is no obvious oversupply in the market. Industry insiders estimate that the utilization rate of some LCD panel production lines in China is only about 70%. Rather than increasing production capacity and saturating the market with additional products, Chinese manufacturers are limiting output, curbing oversupply and maintaining current price levels.
Image source: Counterpoint Research
The realization of this strategy benefits from China’s dominant position in the LCD panel market. Research firm Omdia said that BOE, TCL CSOT and HKC have formed an oligopoly in the field of large-size LCD TV panels. China’s largest manufacturers have a total share of 70% to 85% in the 65-, 75- and 85-inch panel market. In the field of ultra-large panels, Chinese companies almost control the entire market.
Chinese manufacturers have increased their share by massively expanding production capacity and supplying products at low prices. The resulting oversupply has caused LCD panel costs to fall, which is why Korean and Japanese companies have begun cutting back on less profitable areas of the business. Samsung Display will stop producing LCD panels in 2022. LG Display stopped producing LCD TV panels in South Korea and subsequently sold its Guangzhou factory.
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