Shaking LCD Panels in China... Korean Companies Breaking a Sweat

TV Sales Decline but LCD Panel Prices Up 60% in a Year
China Intentionally Reduces Supply

LCD Market Dominated by China with Over 70% Share
China May Lower Operating Rate to 50% in Q1 Next Year

Increased Burden on Domestic TV Manufacturers
Samsung, with High LCD TV Share, Faces 'Emergency'

Prices of liquid crystal display (LCD) panels are moving abnormally. While TV demand has not recovered, panel prices have soared by more than 60% over the past year. As Samsung and LG Display, once the world's first and second largest LCD panel manufacturers, have exited the LCD business, Chinese companies leading the market have deliberately reduced supply. This is increasing the burden on domestic TV manufacturers. There are concerns that price volatility will increase further due to the monopoly of LCD panels by Chinese companies.

According to market research firms Omdia and DSCC, the price of the most popular size, 55-inch resolution 4K LCD TV panels, hit a record low of $81 last September but has steadily risen since March this year and is currently maintaining around $130.

Typically, LCD panel prices rise when TV demand increases. Simply put, if more TVs are sold, TV manufacturers buy more panels, which can drive up prices. However, TV sales this year have been disappointing. Market research firm TrendForce expects global TV shipments to decrease by 2.1% compared to last year.

The industry attributes the rise in panel prices to Chinese companies, which have supplied LCDs in large quantities below cost for years to expand market share, reducing their operating rates to the lowest level in 15 years (around 60%) since last year. With Korean display companies, key players, exiting the LCD business, Chinese companies are accused of adjusting prices through monopoly.

Currently, Chinese and Taiwanese companies occupy more than 70% of the global LCD market. The global LCD panel market share is led by BOE at 28%, followed by China's CSOT (China Star) at 26%, and Taiwan's AUO at 20%.

Korean panel companies exited the LCD business last year citing profitability reasons. Samsung Display fully withdrew from the LCD business in May last year, and LG Display stopped operating its domestic LCD TV panel production lines at the end of last year. LG Display still manufactures LCD TV panels at its Guangzhou LCD plant in China but has already halved its production capacity and is likely to sell the facility eventually.

China is expected to strive to maintain panel prices. They plan to prevent price declines again through production cuts. Omdia forecasts that Chinese companies will reduce LCD fab operating rates to the 60% range in the fourth quarter of this year and possibly down to the 50% range in the first quarter of next year. This implies that panel price instability may deepen for the time being. Chinese panel companies are also known to have pressured TV manufacturers such as Samsung and Sony to raise LCD panel prices.

Domestic TV manufacturers like Samsung Electronics and LG Electronics are facing difficulties. Samsung Electronics, which has a high proportion of LCD TV business, is particularly in an emergency. Chinese companies' control over panel supply could reduce Samsung Electronics' TV shipments to below 40 million units annually. Although Samsung Electronics and LG Electronics, which have a high proportion of high-end products, may have higher TV sales than Chinese companies, they could face threats in terms of volume.

There are growing concerns that the situation may repeat as domestic companies have suffered from LCD collusion by Chinese companies in the past. Recently, LG Electronics won the first trial after a nine-year lawsuit against some Taiwanese companies that colluded to sell LCD panels at high prices in 2011.

This content was produced with the assistance of AI translation services.