The fourth quarter of the year could be a buyer’s market for any company in need of TV-sized liquid crystal displays (LCDs). For the first time ever, reports market research firm IHS, the global market for LCD TV panels declined in Q3 from the prior quarter.
Estimated worldwide LCD TV panel shipments during the third quarter amounted to 58.0 million units, down from 58.8 million in the second quarter, according to a new LCD Market Tracker report from IHS. Last year, third-quarter shipments totaled 60.0 million, up markedly from 54.5 million during the previous quarter.
Although new display technologies are making inroads in the TV market, LCDs are still the dominant technology. However, the technology has been struggling in all markets with the exception of mobile devices. Earlier this year, IHS reported LCD shipments to the laptop market were suffering and price-cutting has been rampant in displays. Some of the world’s biggest manufacturers of LCDs – including Korea’s Samsung and Japan’s Toshiba, Hitachi and Sony -- have had trouble maintaining profitability in LCD panel sales, and several have spun their LCD businesses off into independent units.
“LCD TV panel shipments went through a soft period in the third quarter,” said Ricky Park, senior manager for large-area displays at IHS. “The downshifting of the market comes as a surprise because the third quarter is usually a time when things start heating up, in preparation for the furious upcoming fourth-quarter selling season. However, consumers have not been buying as many new television sets as originally hoped, leaving TV brands with panels that they haven’t been able to move.”
If Q3 LCD TV shipments are merely an inventory blip the overage will eventually be worked off. However, the peaks and valleys experienced by the LCD market are markedly similar to DRAM, which is now a commodity product. DRAM for decades has been marked by periods of extreme overages and shortages which in turn affect pricing. LCD is behaving in the same way.
Also like DRAM, it’s unlikely the LCD market will ever see the stability and pricing of yesteryear. One of the reasons is the entry of China as a major player in the LCD market. Although China will be impacted by the slowdown in Q3, China remains a growth market, according to IHS. Chinese companies are also making inroads in markets outside of China. One Chinese-based maker, CSOT, is maintaining healthy inventory even though it has the highest portion of Chinese customers for TV panel shipments, according to IHS, thanks to an expansion in its client base that includes the largest TV brand in sales: Samsung from South Korea.