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Company News >> Panel prices fell Machine manufacturers ushered in operating pressure turn?
Although capacity saturation and sluggish performance have been the norm in the color TV market in recent years, the situation in 2017 is particularly severe. Affected by the continuous rise of LCD panels (panel costs accounted for more than 65% of the total cost), China's color TV retail sales in 2017 decreased by 6.6% year-on-year, the largest drop since 2003.
It is reported that the current TV panel price has fallen to or close to the historical lowest point of the previous wave of price cycles in 2016, and Ove Cloud expects that prices in June this year will continue to drop. Everything seems to indicate that the entire manufacturer has ushered in a turning point in operating pressure. Is this really the case?
LCD panel prices diving again
According to IHS analysis, panel oversupply is the main reason for the decrease in TV panel prices.
In fact, TV panel prices have fallen for three consecutive quarters since the end of the second quarter of 2017, but some panel makers have not reduced their capacity. In addition, panel makers’ investment enthusiasm for high-generation production lines is still rising, and mainland panel giant BOE has built two 10.5-generation large-size LCD production lines in Hefei and Wuhan, and the production capacity has been accelerated. In the short-term, the global includes China’s TV industry. The demand for aircraft has not been effectively increased. Therefore, after the “World Cup” stocking machine of the whole machine plant came to an end in April of this year, the situation of oversupply of panels has become more severe, which has accelerated the decline in panel prices.
This round of price reduction covers the major size of the panel. According to forecast data released on May 9 by Ovi Cloud, in May this year, 32-inch, 40-inch, 49-50-inch panel prices will fall by 2 dollars, 43-inch panel prices will drop by 4 dollars, and 55-inch panel prices will also Continue to decline, even the oversized 65-inch panel is no exception.
Machine manufacturers usher in business pressure to turn?
If panel prices remain declining throughout the year, it is indeed a landmark turning point for large-scale TV makers to reverse profitability.
Insiders of the entire machine manufacturer stated that if the 50-inch 4K class panel is used as an example, if the monthly decline rate is 4 US dollars, it will give the whole machine manufacturer a relief for the profit pressure of 25 million yuan per million units.
Previously due to panel prices, domestic TV manufacturers increased the price of some TVs. Now that the panel price has declined across the board, TV makers have provided enough room for price cuts. The low-price competition between TV manufacturers has not only stayed in the 32-inch to 50-inch room, but also extended to the mainstream size segment and the large-size segment. As e-commerce channels are very sensitive to prices, some manufacturers have taken the lead in reducing the price of 55-inch LCD TVs to 1999 yuan. At the same time, the price of some 65-inch LCD TVs also dropped to 3,499 yuan due to the sharp drop in panel prices.
Of course, not all TV manufacturers dare to lower prices, and most manufacturers are still waiting to see. For example, in the “May 1st” sales season (April 30 to May 5), most brands followed some 55-inch TVs down to more than 2,000 yuan in order to test the market. Because there are still two relatively large sales opportunities - "6.18" and the World Cup, manufacturers hope to drive TV sales through these two nodes. Zhang Tao, general manager of Gome's color TV division, believes that television manufacturers are under pressure to ship. In order to promote sales, many manufacturers have already lowered the prices of 55-inch TVs to 2,399 yuan, which is not far from 1999 yuan.
Excessive panel production capacity, the price drop, in the short term, is a good thing for the downstream color TV companies, can reduce the purchase cost of color TV companies. But in the long run, it is not necessarily a good thing. An unbridled, endless, and bottomless price war will eventually destroy industry value and lose the future of the industry.
The “warming up” of LCD panel prices is not the spring for China's color TV companies, but the beginning of greater challenges.

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