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>> Strong demand for Samsung TV panels, panel makers can't meet demand 22th,Nov,2018
Samsung Electronics is increasingly worried about the problem that panel supply cannot meet demand. In order to minimize the impact of panel supply shortages and shorten delivery times, Samsung Electronics has asked panel makers to start airlifting panels from March and April this year. Air transport continued in May and June. Since the third quarter, most of the panels will be converted to shipping, but there are still a few new panels that continue to be airlifted.
Samsung Electronics is busy sourcing panels to handle the production of TV sets in its various regions, but its panel suppliers' actual supply capacity and delivery schedules are unable to meet the company's goals in the second and third quarters. At the same time, Samsung Electronics is also facing some panel supply issues, including panel quality issues for Chinese suppliers.
Samsung Electronics has begun to negotiate its panel distribution for the third quarter with various TV panel manufacturers. Samsung Electronics needs to win more panels to ensure that tight supply does not affect its annual shipping target. But this will be challenging because panel makers may adjust their customer portfolio and production strategy. At present, the panel manufacturers' capacity allocation is adjusted according to the panel price and the interest rate.
Samsung Electronics' goal of purchasing TV panels in the third quarter was 16 million, but none of its panel suppliers met such aggressive demand. Currently, Samsung Electronics is planning to purchase at least 15 million units in the third quarter, but since demand forecasts are much higher than panel makers' supply capacity, some suppliers such as BOE cannot promise to deliver the required quantity unless there are good reasons for panel makers to The production capacity of other TV manufacturers was transferred to Samsung.
Although TV manufacturers, such as Samsung Electronics, are aggressively looking for more panels, there are also some panel makers who continue to pay attention to and worry about the shipment performance forecasts of TV brand manufacturers (including global first-tier brands such as Samsung Electronics, LG Electronics and China). The panel supply will be based on panel price negotiation results, TV manufacturer business prospects and market demand, and supply chain relationships. For TV manufacturers, their TV channel inventory at the end of the second quarter and shipment targets and industry competition in the second half of this year are key factors in adjusting panel demand in the third and fourth quarters. Some TV manufacturers, especially Chinese TV brand manufacturers, may also be able to adjust their demand forecasts in the fourth quarter, when they realize that their tactical increase in the number of panel purchases cannot be consumed as expected.
The table below shows Samsung's quarterly panel purchases and TV shipment trends. It can be seen that Samsung Electronics will purchase more panels in the third quarter of this year.
Samsung Electronics plans to purchase more panels in the third quarter, but there is a limit to the actual availability of its internal and external panel suppliers. In addition, panel makers have changed their strategies to maintain their advantages in industrial supply chain negotiations.
In the second quarter of this year, Samsung Display could not meet the demand of Samsung Electronics. Actual panel shipments may be 3.6 million units, slightly higher than the previous forecast of 3.4 million units, but far lower than the original target of 4 million units. . Because Samsung Electronics feels that there is insufficient supply from external suppliers, Samsung Electronics recently requested more panel support (target 5 million units) within the group. Although Samsung's supply capacity is expected to return to normal levels in the third quarter, however, most panel makers cannot guarantee the strong demand of Samsung Electronics due to the fact that the actual increase in supply is still limited.
In order to obtain better trading conditions in the supply chain, and to occupy a favorable position in the price negotiations with TV manufacturers, panel makers are strategically shifting their production capacity or making some changes in panel allocation.
Some panel makers originally planned to reduce the supply of Samsung Electronics in the third quarter. But recently, Samsung Electronics is changing its product size portfolio, and smaller-size panels such as the 23.6" shipping plan have become very aggressive. This has helped Innolux's business growth for Samsung Electronics, because Innolux is the panel. Major supplier.
From the second half of this year to 2017, the industry supply chain concerns and bargaining chips are mainly around 40", 43", 45", 49" panel capacity supply and output distribution, and 50", 55", 60 Cost competitiveness and price trends for ", 65" and larger panels. Chinese panel makers are still the main supplier of 32" panels, but TV brand manufacturers such as Samsung Electronics are still concerned about the quality and reliability of their 49" and 55" products.
Samsung Display is considering transferring 32" and 40" panel capacity, focusing on 55" and larger panel production. Samsung Display will allocate the planned capacity to its customers. When Samsung Electronics increases panel demand, Samsung Display will still compare Priority capacity allocation. Samsung Electronics' panel purchasing attitude and strategic changes will affect the panel distribution, capacity arrangement and TV panel prices of panel makers in the third quarter.
Most TV manufacturers are currently facing the shortage of larger size panels such as 55" and 65", especially UHD products. In order to meet growing demand and improve financial conditions, first-line panel manufacturers prioritize the production of 55" and 65" panels. However, the actual output in the third quarter is somewhat limited.
Some panel makers such as AUO are planning to phase out 65" FHD panels, focusing on the 65" UHD model. Moving all 65" products to UHD models requires more equipment investment, such as COA and copper process processing. In addition, UHD's yield is still not as good as FHD.
Samsung Display has suffered from production problems due to the use of thinner glass and BCS. Although the company is returning to normal production levels in July, Samsung has shown difficulties in meeting 65" panel demand. Samsung's supply shortage is mainly due to, 1) strong demand from Samsung Electronics within the group has affected Samsung's display The distribution of other TV customers, 2) Samsung shows that there are still some capacity restrictions in the eight-generation factory in Korea, and the second-phase production of China's eight-generation factory is not as fast as expected.
China's top six TV brand manufacturers still have strong panel purchases in the third quarter, while Hisense and TCL are expanding in size but Skyworth's purchases are slightly less.
After the strong panel purchases in the first quarter of 2016, the top six TV brand manufacturers in China had some inventory at the end of March, but due to supply problems, they are still worried about the supply in the second quarter, so they still want to maintain purchases in the second quarter. Volume, the target total purchase of 18 million pieces, 2% higher than the previous month's forecast.
Although Chinese TV manufacturers actually have some TV sets in stock, there is no obvious urgency to face panel purchases, but considering the risk of tight panel purchases and their aggressive shipments in the domestic and overseas markets in the second half of the year. The goal is that Chinese TV manufacturers continue to purchase panels, which include strategic purchases.
The table below shows the number and plan of panel purchases for the top six TV manufacturers in China in the second half of the year.
These Chinese TV manufacturers, in addition to Skyworth, which already has relatively high inventory levels, plan to increase the number of panel purchases in the third quarter. It is estimated that the number of purchases will exceed 19 million, an increase of 10% from the previous quarter and an increase of 27% from the same period last year. The procurement plan is ten percentage points higher than the original forecast, and the expansion of panel procurement is mainly from Hisense and TCL. Hisense and TCL's overseas market export plans are very radical, especially with the Black Friday promotions of retail giants in North America.
TCL has a more aggressive shipping target, including expanding more overseas market operations. Therefore, it hopes to maintain a high purchase volume in the third quarter of 2016. Huaxing Optoelectronics' T2 eight-generation plant will begin mass production in the third quarter of 2016, and TCL has some strategic purchases from Huaxing Optoelectronics. TCL's panel purchases in the third quarter of 2016 are expected to exceed 5 million.
Hisense added its panel demand forecast, which is about 1 million more than the previous forecast, mainly 32", 43", 50" and 65". But AUO's 43" and 50" panels are in tight supply. Hisense is discussing with AUO. If there is a problem with the supply, as an alternative, Hisense plans to increase the panel purchase from LG.
Since Chinese TV manufacturers have higher shipping plans this year, their strategic goal is to increase their market share in overseas markets, especially Hisense, TCL and Skyworth, so they still need to purchase more panels in the second half of 2016. Even though they now have higher inventory, due to panel supply issues, especially Samsung’s plans to close the seven-generation line responsible for producing 40-inch panels by the end of this year, and Samsung Electronics are actively planning to increase the third quarter. Panel demand, we can see that China's top six TV brand manufacturers will have to actively purchase panels. However, the risk that they may adjust their inventory in the fourth quarter is still not to be ignored.
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