LCD Prices Drop, But Panel Supply Declines

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Santa Clara, Calif. - Total worldwide TV market shipments rose 3.7 percent year over year in the third quarter of 2011 to 62 million units, representing a 12 percent increase from the previous quarter, according to research just released by The NPD Group's



The increase marked a healthy rebound from the 1 percent year-to-year shipment decline in Q2 2011 and weak 1 percent year-to-year gain in Q1, the DisplaySearch "Advanced Quarterly Global TV Shipment and Forecast Report" stated.

However, orders for LCD and plasma panels used in the production of TV sets were both down in the period, resulting in a somewhat lean inventory situation toward the end of the quarter.

With supply-chain inventory problems persisting well into midyear, many TV brands cut back on their shipment plans for 2011 and reduced panel orders in Q3, which resulted in larger price declines for those core panels, DisplaySearch said.

The positive for consumers is that there will be even more attractive retail set pricing during the upcoming holiday season, particularly during Black Friday in the United States, DisplaySearch predicted.

"End-market demand has been weak in North America during most of 2011, with unit shipments falling around 4 percent year to year through the first three quarters of the year," said Paul Gagnon, DisplaySearch North America TV market research director. "However, consumers, still quite sensitive to pricing, may be delaying purchases until the holidays when they expect to see the best deals. Consumers have learned this practice from observing previous holiday selling periods."

Many suppliers have taken a conservative approach to inventory for the holidays. Therefore, if demand is better than expected, there may not be much slack in the supply chain to fulfill restocking orders. This could potentially lead to some product shortages.

LCD TV shipments worldwide were about 1 percent better than forecasted, rising 12.9 percent year to year to 51.5 million units, compared with single-digit annual growth during Q1 and Q2 2011.

This is a good indication of improving demand in end markets. Retail prices for some LCD sizes are falling below key price levels, like $300 for 32-inch and $500 for 40- to 42-inch.

The transition to LED backlights continues, but the rate of adoption has been slower than expected. LED-backlit models have not been able to pass the 50 percent level, accounting for 48 percent of total LCD TV shipments, with the vast majority of those being edge-lit models.

Similarly, higher-frame-rate models (120Hz or higher) have been mostly unchanged through 2011, representing about 22 percent of LCD shipments in the quarter. 3D grew to about 11 percent of LCD TVs, up from 9 percent in Q2.

The slower growth of these two advanced features is indicative of a continuation of conservative consumer spending and reluctance to pay significant premiums.

Plasma TV shipments had shown increasing softness in recent quarters, declining 6 percent year to year in Q2 2011 and falling 14 percent year to year in Q3 2011 to 4.1 million units.

The decline in plasma TV shipments is the result of closer price competition with LCD models, leading to a transfer of market share at key sizes like 42-inch and 50-inch.

In addition, poor profitability at plasma TV heavyweight Panasonic has led to a shift in focus to larger models and more richly featured sets with less emphasis on price competition.

Within plasma, 720p models account for about two thirds of unit shipments, but DisplaySearch forecasts a bigger shift to 1080p in the near future.

Finally, 3D rose to about 27 percent of plasma TV shipments in Q3.

The study show 3D representing 11 percent of total worldwide TV unit shipments and 27 percent of revenue.

3D continued to see solid gains in shipment and revenue penetration worldwide, DisplaySearch said, with Western Europe and China representing the greatest demand of 3D, at 13 percent and 11 percent of total TV unit shipments, respectively.

North America was initially forecast to be the leading market for 3DTV, but 3D accounted for only about 8.5 percent of total unit shipments. An unwillingness to pay much of a premium for 3D, and lower availability of low-cost 3D sets, compared with regions like China, have impacted uptake of 3D, DisplaySearch reasoned.

During the upcoming holiday selling season in the U.S., 3D is not expected to be highly promoted. Instead, retailers will focus on large sizes with strong value pricing, but with lighter feature content, according to the report.

For brand share, DisplaySearch said Samsung help onto its No. 1 ranking as a global TV brand, leading in LCD and plasma TV, according to DisplaySearch.

Samsung's global flat-panel TV revenue share rose slightly in the third quarter to 22.8 percent, taking a large lead over No. 1 ranked LG. Samsung was the No. 1 brand on a revenue basis in every region, with the exception of Japan, where it does not sell TVs, and led LG (a strong emerging market brand) in Asia Pacific and Latin America, DisplaySearch said.

Samsung was No. 1 in LCD and plasma TV revenue, No. 2 in CRT TV revenue, and was the only top five brand to post year-to-year revenue growth in the period.

LG was the No. 2 brand worldwide, at 13.1 percent with small quarter-to-quarter and year-to-year revenue declines. It ranked second in LCD TV and third in plasma TV, but continued to lead in CRT TV with more than double the revenue share of any other brand.

Sony remained the No. 3 brand, worldwide, in global flat-panel TV revenue during the third quarter, but saw a significant decrease in market share, posting a 13 percent year-to-year decline in total revenue.

Panasonic and Sharp rounded out the top five, with Sharp gaining revenue share on increased shipments of large sizes, like 60 inches.

Samsung was the No. 1 global brand of 3DTV overall, accounting for all technologies, with 31 percent of revenue. Within the 3D LCD TV category, Samsung was No. 1 while Panasonic claimed the top 3D plasma TV revenue share.


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