Production Cycle and Inventory Status of LCD TV Supply Chain

Global consumers show a strong desire to purchase TVs. The “stay-at-home” trend includes working from home, studying from home, entertaining at home, and shopping from home. Benefiting from this trend, demand for LCD TVs, laptops, LCD monitors, and tablets remains strong.

Brand owners, manufacturers, OEMs, ODMs, and retailers plan to fill channels to sell more products.

Global TV brands and OEMs continuously procure more panels to meet business goals (including some duplicate orders).

Panel manufacturers significantly raise prices to quickly turn losses into profits. From June 2020 to December 2020, the price of open cells for LCD TVs has increased by 40%-50%. It is expected that from January 2021 to May 2021, there will be an additional increase of 30%-40%.

Component shortages (glass substrates, display driver ICs, T-Con, PMIC, polarizers) frequently disrupt the supply chain, making manufacturers more anxious and leading to more orders.

Korean panel manufacturers are changing their factory closure plans, extending the operation of Gen7 and Gen8 in Korea until 2021.

As both panel and finished product prices continue to rise, the uncertainty and risk of demand decline in the second half of 2021 are increasing.

The “stay-at-home” craze cools down, and panel demand gradually levels off.

Panel prices have been rising for 12 consecutive months (from June 2020 to May 2021). Manufacturers and OEMs, ODMs have reached a certain level of losses, so they will gradually control procurement orders.

New capacity in China is gradually increasing, including the T7 Gen10.5 TFT LCD plant of Huaxing Optoelectronics, the H5 Gen8.6 TFT LCD plant of HKC Display, and the incremental capacity after the expansion of existing production lines (such as BOE, Huaxing, SIO, etc., are all expanding their existing capacity).

Component shortage issues are gradually being resolved. New component capacity (glass furnaces, wafer foundries) is being built rapidly.

Panel manufacturers believe that before the pressure of digesting capacity and the component shortage issues are completely resolved, the market remains in a balanced state, so there is no reason to lower panel prices.

Terminal market demand begins to shrink, but it is a mild adjustment rather than a collapse. Because terminal brand manufacturers still need to replenish the currently low channel inventory.

With the increase in capacity, the resolution of component shortage issues, and the long-term business relationship pressure, panel manufacturers begin to face the pressure of digesting capacity, leading to lower panel prices.

Price competition will start from lower-tier panel manufacturers.

To maintain good profit levels, panel manufacturers plan to gradually lower panel prices. However, manufacturers will exert pressure on panel manufacturers before seeing a significant drop in demand.

Accidents at several glass factories.

Continued shortage of display driver ICs and 8-inch semiconductor wafer capacity.

Strong demand and sales for terminal market TVs encourage LCD TV brands and OEMs to keep panel orders and demand at a high level, even leading to a certain degree of “double-booking” (providing the same orders and demand forecasts to multiple panel suppliers).

The strong sales of LCD TVs in the terminal market have helped retailers clear inventory, and there are even backlogs of orders that cannot meet consumer demand.

Supply bottlenecks caused by surges in goods due to the COVID-19 pandemic and quarantine policies have led to severe inefficiencies in the global LCD TV supply chain and logistics.

Soaring panel prices have caused panic among LCD TV panel buyers, demanding increased panel allocations.