China’s Top Panel Makers to Take Extended Holiday Amid Price Slump
BEIJING, Sept. 12, 2024– China’s three major panel manufacturers, BOE, TCL Technology’s TCL Huaxing, and HKC, are set to take extended holidays aroundthe upcoming National Day holiday, marking their second long break this year. This move comes as the LCD TV panel market faces continued price declines for the third consecutive month, prompting the industry to seek a balance between supply and demand.
According to industry sources, the panel makers have notified their clients of the planned production shutdowns, which will last for one to two weeks. The shutdown is expected to beginin late September and continue through the National Day holiday, which falls on October 1st.
BOE, the world’s largest panel maker, is expected to halt production at four of its LCD TV panel lines during this period.These include its 10.5-generation lines in Hefei and Wuhan, its 8.5-generation line in Fuzhou, and its 8.6-generation line in Chengdu. Additionally, its Beijing 8.5-generation line, which produces both IT and TV panels, will beshut down for 12 days, while its Hefei and Chongqing 8.5-generation lines will be shut down for seven days.
TCL Huaxing, the second-largest panel maker in China, will also shut down its four main LCD TV panel production facilities in Shenzhen for 14 days, while one of its smaller panel factories will be shut down for seven days. HKC, the third-largest panel maker, will shut down its four factories producing LCD TV panels and mixed IT and TV panels for 13 to 14 days. These factories are located in Chongqing, Chuzhou,Mianyang, and Changsha.
Analysts predict that the production shutdowns will reduce the capacity utilization rate of these major Chinese panel makers to between 50% and 70% in October. Taiwanese, Japanese, and Korean panel makers are also expected to adjust their production schedules based on demand.
The decisionto take extended holidays comes amid a challenging market environment for LCD TV panels. Prices have been declining since July, with a significant drop in August and continued declines in September. According to Sigmaintell, the prices of 50-, 55-, 65-, and 75-inch LCD TV panelsfell by $1 to $3 per panel in September compared to August, with only 32-inch panel prices remaining stable.
The declining panel prices are attributed to a combination of factors, including weak demand in the global TV market, increased inventory levels at TV brands, and a growing concentration of panel production inChina.
The TV market has not shown significant signs of recovery in the second half of the year. Sigmaintell forecasts that global LCD TV panel shipments will reach 110 million units in the second half of 2024, a 7% decrease from the first half. The shipment area isexpected to reach 80 million square meters, a 3.9% decrease from the first half.
In contrast, the first half of 2024 saw strong demand and price increases for LCD TV panels. Global shipments reached 120 million units, a 0.6% increase year-on-year, while the shipment area reached 90 million square meters, an 8% increase year-on-year. This resulted in significant profit growth for panel makers. BOE’s revenue in the first half of the year reached 93.39 billion yuan, a 16.5% increase year-on-year, while its net profit reached 22.8 billion yuan, a 210.4% increase year-on-year. TCL Technology, the parent company of TCL Huaxing, reported a 40.4% increase in panel revenue to49.88 billion yuan in the first half of the year.
However, TV brands saw their profitability weaken in the first half of the year. The weak global TV market and rising inventory levels have put pressure on TV brands to reduce costs. This, in turn, has put downward pressure on LCD panel prices.
The continued decline in LCD panel prices and the growing concentration of the global market have provided an opportunity for panel makers to further reduce production and stabilize prices.
BOE, TCL Huaxing, and HKC currently control approximately 60-70% of global LCD TV panel production capacity. In lateAugust, Sharp officially shut down its 10-generation LCD panel line in Japan to improve the financial performance of its listed company. On August 1st, LGD announced that TCL Huaxing had been selected as the preferred bidder for its 8.5-generation LCD panel factory in Guangzhou.
Withthe continued withdrawal of Japanese and Korean companies from the LCD TV panel market, Sigmaintell expects Chinese manufacturers to hold a 72.7% share of global LCD panel supply by 2025.
Analysts believe that the planned production cuts will help panel makers reduce inventory levels and balance supply and demand.However, they also warn that the move could increase costs for panel makers and reduce profit margins for TV brands.
The industry is calling for a more balanced distribution of profits between upstream and downstream companies. While short-term adjustments to production are necessary to ensure profitability, long-term growth requires cooperation and competition to ensure thesustainable development of the TV and panel industry.
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