The TV market supply chain has rotated between various Far East countries in recent decades, shifting from Japan to Korea. But Korean firms now face stiffening competition from China-based display manufacturers, as television makers revise their sourcing strategies to meet market needs. That’s the conclusion of a report from IHS Markit|Technology.
According to IHS|Markit, Korean LCD TV panel makers are undergoing fab restructuring and shutdowns this year, prompting TV makers to seek alternative supply bases.
“With only a limited number of choices available for panel supply, TV makers are turning to Chinese companies to meet their display needs,” said Deborah Yang, director of display supply chain at IHS Markit | Technology. “Intense competition among major Chinese suppliers and the arrival of new players is resulting in a sharp increase in the availability of panels from China.”
IHS noted that the global top-three TV brands are set to increase their purchasing from Chinese suppliers to 62.6 million displays in 2020, up 35% 2019.
The competition between major Chinese suppliers BOE Technology and China Star Optoelectronics Technology is intensifying, particularly in the realm of LCD panel supplies from Gen 10.5 fabs. Meanwhile supply availability is improving at emerging Chinese panel makers such as HKC, Nanjing CEC-Panda LCD Technology and Xianyang Caihong Optoelectronics Technology (CHOT).
The increasing availability of alternative panel suppliers is expected to help promote sales to global TV brands like Samsung, LG Electronics and several Chinese firms. Top-tier TV brands are signing long-term supply agreements with both captive and selective external panel suppliers to ensure they get the highest priority business in 2020.
The shifting panel display supply chain could potentially create challenges for TV makers, according to IHS. Most top-tier TV makers try to diversify their sourcing power to enhance their own competitiveness. However, they do not necessarily carry the responsibility of consuming excess panel supplies from captive suppliers.
“When the market becomes dominated by a few powerful players, TV makers and panel makers may face various dilemmas and risks as they attempt to hold on to bargaining power,” Yang noted.
For instance, IHS noted that Samsung’s will reduce sourcing from its captive supplier, Samsung Display, as the latter plans to convert its LCD TV panel capacity to quantum dot displays. Likewise, LG Electronics’ sourcing volumes from LG Display will also be slashed in 2020. LG is likely to purchase from external vendors such as BOE Technology, HKC and Nanjing CEC-Panda LCD Technology to compensate for the LCD TV panel shortfall, IHS noted.