A decline in supply and a rapid rise in LCD panel prices are occurring in the wake of factory shutdown in China attributable to Covid-19.
Market research firm WitsView said on Feb. 11 that the increase in LCD TV panel prices for the first two weeks of this month amounted to five times the pace shown in the previous month and the average price rise jumped from 0.2 percent to 1 percent in that period. “Especially, the price rise was witnessed in every range from 32-inch to 75-inch panels, which was for the first time since November 2016,” it explained, adding, “The price rise is likely to be accelerated in March and the acceleration is likely to continue until at least June.”
In the second half of last year, the LCD panel price rose moderately with LG Display and Samsung Display starting to withdraw from the market filled with cheap supplies from China. More recently, the price rise began to speed up in the wake of the coronavirus outbreak and the resultant shutdown of factories in China. Wuhan, the source of the virus, is home to manufacturing facilities of CSOT, Tianma and BOE, the world’s largest LCD panel supplier.
Amid the rapid rise in price, South Korean display and TV manufacturers are responding in different ways. The former, which are pulling out of the market as mentioned above, managed to gain some time for process conversion.
For example, LG Display is planning to accelerate its OLED portfolio expansion in Guangzhou and reduce the losses of its LCD business unit in the first quarter of so that its global OLED TV market share can be substantially increased in the second half of this year. Likewise, Samsung Display is going to accelerate its investment for quantum dot display production. The company is currently replacing existing LCD process equipment with quantum dot display production equipment.
On the other hand, Samsung Electronics and LG Electronics are likely to be adversely affected by the rise in price with LCD TVs still accounting for a very large portion of their sales. Specifically, most of Samsung Electronics’ TV sales are derived from LCD TVs, including QLED TVs, and LCD TVs currently represent approximately 80 percent of LG Electronics’ TV sales although the company is increasing the ratio of OLED TVs. A cost burden may be added to them in that panels made in China account for about 40 percent of LCD panels used in the two companies’ TVs.