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IHS: Samsung, LG Step Up TV-Panel Outsourcing To China

TV makers Samsung and LG continue to outsource more of their TV-display production to Chinese factories and rely less on their own display-making factories, research company IHS found.

 “While lowering their reliance on captive panel suppliers, [Samsung and LG] will continue to leverage their growing Chinese panel supply base and supply of competitive panel sizes from Taiwan in 2016 in an attempt to reduce cost,” said Deborah Yang, IHS’s director of display supply chain research and analysis.

The external vendors have become “more competitive in supply availability, panel pricing and quality,” she noted.

LG and Samsung are making the effort “to maintain their leading position in the TV market and better compete with other brands, particularly from China,” she explained.

The two South Korean TV brands accounted for 41 percent of the total panel shipments of Samsung Display and LG Display in 2015, down from 46 percent in 2014, IHS found. The figure will decline to 37 percent in 2016.

“During a downturn in the business cycle, TV brands have tended to purchase panels primarily from their own captive suppliers,” Yang added. “This year, however, TV brands are uncharacteristically lowering their reliance on internal supply and instead outsourcing more to vendors in China and Taiwan, which have become better aligned with their product lineups.”