According to TrendForce investigations, global TV shipments will reach 47.26 million units in 1Q22, down 20% QoQ. Driven primarily by the Russian-Ukrainian war, prices of raw materials such as crude oil and natural gas have risen, while the recent breakout of the Omicron strain of the pandemic in China has incited repeated no warning attempts at enacting dynamic zero-COVID, which has hindered the flow of logistics, hiked freight rates, and taken as a whole, exacerbated existing global inflation woes. Consumers with limited disposable income have started to cut back on non-essentials with TV sales bearing the brunt. Looking at the three major TV sales regions of North America, Europe, and China in 1Q22, high inflation in Europe and the United States has led to a sharp 20% drop in demand. In China, due the festering pandemic, numerous cities have been locked down, while unemployment is spiking, logistics are impeded, and prices soar. TV product sales are at a complete disadvantage and the demand in 1Q22 dropped by 15~20%.
TrendForce further points out, originally Chinese brands banked on low 2Q22 panel prices and not being required to shoulder expensive shipping costs in the domestic market, expecting that the 618 anniversary promotional period would inject fresh enthusiasm into the market and boost annual shipments. However, now that China’s TV sales are disrupted by the pandemic, any hope riding on TV brands’ only large-scale promotional event in the first half of the year may have been dashed. In addition, Q3 was when brands stocked up in previous years for Black Friday and Christmas season promotions in Europe and the United States. However, this year’s FIFA World Cup was postponed to November, resulting in overlapping promotional schedules, which may curb sales. Ocean freight remains expensive this year, with additional costs increasing with greater item size, which is not conducive to the rollout of branded manufacturers’ large-scale promotional activities in 2H22. Therefore, TrendForce estimates that this year’s TV shipments will drop further to 212 million units, for an annual growth of only 1%, and there exists additional potential for downward risk.
Demand in Europe and US misses estimates, international brands drop orders, and 2Q22 decline in TV panel prices expands further
The top two leading TV brands, Samsung and LG Electronics, are mainly sold in North America and Europe. Therefore, since TV sales in Europe and the United States declined by 20% in 1Q22, this had the greatest impact on these two leading brands. Samsung Electronics shipped 10.9 million TVs in 1Q22, down 3.1% QoQ while LG Electronics shipped 6.53 million TVs in 1Q22, down 11.8% QoQ and down 6.4% YoY. Affected by weak terminal demand, the two major brands revised their panel purchase orders in late March. Samsung’s purchasing volume in 1Q22 was revised down 7.5% and fell by 9.5% in 2Q22. LG Electronics primarily focused on reducing purchase orders in 2Q22 and purchasing volume decline is expected to exceed 20%.
TrendForce specifically states, major international manufacturers have recently revised their orders in succession. Although Chinese brands have yet to see a significant reduction in orders, if 618 promotions are disappointing, it cannot be ruled out panel procurements will begin to fall in mid-to-late Q2. Although branded manufacturers significantly revised TV panel orders downward in 2Q22, panel manufacturers have not seen a significant reduction in utilization rate, which will depress the price of panels below 55 inches (inclusive) in a sustained freefall while the prices of large size panels above 65 inches (inclusive) will continue to deteriorate.
Samsung Electronics delays launch of WOLEDs, styming 2022 OLED TV shipment performance
This year, the supply of OLED TV panels has benefited from LG Display’s expanded production capacity of 8.5-generation OLED TVs in Guangzhou. As supply increased, LG Display also improved product specifications and prices, but this led to Samsung Electronics delaying the verification and launch schedule of white OLED products. Not only has Samsung Electronics’ 2022 market share of OLED TVs shrunk from 15% at the beginning of the year to 6.4%, but global OLED TV shipments will be revised down to 7.79 million units this year, with an annual growth rate of 17%.
Quarterly TV shipment for 3Q21 reached 52.51 million units, representing an 8.3% QoQ increase but a 14.7% YoY decrease, according to TrendForce’s latest investigations. Demand for TVs was constrained during the quarter by the increase in various country’s vaccination rates as well as the rising retail prices of TV sets, resulting in a YoY shipment decline despite the arrival of the peak season. It should be noted that prices of TV panels began to plummet in August, and this price drop enabled Chinese TV brands to both expand sales during the Singles’ Day (November 11) shopping festival and in turn make up for deficits in their yearly sales targets. Global brands, on the other hand, will be unable to capitalize on the price drop of TV panels by reflecting this cost-savings on their TV sets’ retail prices until 1Q22 due to factors such as production, transportation, and inventory adjustments. These brands are therefore having a difficult time increasing their TV shipment for 4Q21. Quarterly TV shipment for 4Q21 is expected to reach 59.13 million units, representing a 12.6% QoQ increase but an 10.3% YoY decrease. TV shipment for 2H21 will therefore likely be among the lowest compared to shipment volumes for second halves of previous years historically.
TrendForce further indicates that TV manufacturers’ shipment performances have been weakening this year as the market approaches the year’s end. Stimulus checks issued in the US resulted in persistently high TV shipment in North America in 1H21, with brands maintaining their procurement of TV panels, thereby driving up the prices of TV panels as a result. As the COVID-19 pandemic is gradually brought under control, and everyday life returns to normalcy in Europe and North America in 2H21, the pandemic-generated upswing in TV sales subsequently lost momentum. Furthermore, while prices of raw materials and transportation/logistics services remained sky-high, manufacturing costs of whole TV sets also underwent a sharp climb and were then transferred to consumers. Taken together, these factors quickly wiped out market demand for TVs. TrendForce therefore expects annual TV shipment for 2021 to reach 210 million units, a 3.2% YoY decline.
With a forecasted annual shipment of 6.8 million units for 2021, OLED TVs have become favored by various brands amidst rising manufacturing costs of TV sets
TV brands face various manufacturing-related challenges this year. Not only have panel costs, which account for the largest share of TV sets’ manufacturing costs, undergone an increase, but port congestions have also led to rising shipping costs and an extended lead time before TV sets can be delivered for retail sale. In addition to an uneven availability of various components, these aforementioned obstacles all exacerbate the risks involved with TV brands’ shipment. In a bid to maximize profits, however, brands have been making a concentrated effort to ensure that the production of OLED TVs remained free from disruptions in an effort to maximize profits.
As brands shift the focus of their sales efforts to OLED TVs, OLED TV shipment for 2021 is expected to reach 6.8 million units, a 72.8% YoY increase. This growth can primarily be attributed to an increase in OLED TV supply due to the expanded production capacity of LGD’s production line in Guangzhou, as well as the narrowing difference between LCD panel prices and OLED panel prices due to the sharp rise in the former in 1H21. In particular, LGE is set to take leadership position with an over 60% market share and a 91% YoY growth in its OLED TV shipment. Trailing behind in second place is Sony, which has been sourcing OLED panels from LGD. The Japanese company is expected to register a 53% YoY increase in shipment and possess a 20% market share. Panasonic, on the other hand, comfortably took third place with a 7% market share. Notably, Xiaomi and Sharp are the two dark horses with regards to OLED TV shipment this year with explosive YoY growths of 900% and 140%, respectively.
Major brands will concentrate on the high-end and large-sized segments, while smaller brands will continue to steadily develop mainstream products
While demand in the TV market recovers as the pandemic runs its course, TrendForce expects 45% and 55% of the total annual TV shipment for 2022 to take place in 1H22 and 2H22, respectively. TV shipment for 2022 will likely reach 217 million units, a 3.3% YoY increase, as brands are able to aggressively ramp up their TV shipments thanks to not only an undisrupted supply of panels, but also gradually stabilizing prices. For major brands, their focus will be on medium-sized and large-sized products and on products with substantial added values. Hence, the market share of large-sized TVs (including 65-inch and above models) will for the first time ever surpass 20%, with medium-sized (40-inch to 59-inch models) TVs remaining at a 55% market share. Although major brands are gradually exiting the small-sized segment, and smaller brands will have an easier time expanding their presence in emerging markets owing to gradually stabilizing prices, small-sized (39-inch and below models) TVs will see their market share drop by 1.8% next year to 25%. In any case, the primary target markets for major brands and smaller brands will not overlap next year.
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