[Asia Economy Reporter Changhwan Lee] The price of liquid crystal display (LCD) TV panels has risen at the fastest rate in six months. This increase reflects the rise in TV sales mainly in developed countries since last month, as well as the panel production cuts by domestic companies such as Samsung and LG. The display industry, which has been struggling due to the novel coronavirus disease (COVID-19), is expected to seek a rebound opportunity in the second half of this year.
According to market research firm WitsView on the 8th, the average price of LCD TV panels in the first half of July was $139, up 2.3% compared to the second half of June. This is the highest increase in six months since the first half of January.
By type, the 65-inch panel rose 2.9% to $179 compared to the first half of the month, the 55-inch panel increased 5.2% to $121, and the 43-inch panel went up 4.0%. Except for the extra-large 75-inch panel, all products showed an upward trend.
The rise in LCD TV panel prices is due to the resumption of economic activities centered on the U.S. and Europe since last month, which led to an increase in TV sales. The fact that TV manufacturers hurried to purchase panels ahead of large-scale shopping events such as Black Friday in the second half of the year also had an impact.
NH Investment & Securities forecasted that with the resumption of economic activities, the shipment volume of major TV manufacturers in the third quarter will surge 31% quarter-on-quarter to 69.41 million units. On the other hand, panel manufacturers' shipments are expected to fall short of demand at 67.15 million units.
Ko Jung-woo, a researcher at NH Investment & Securities, explained, "This panel price increase is largely due to set manufacturers expanding panel purchases in preparation for the shopping holiday season in the second half of the year," adding, "In the third quarter, panel prices are expected to continue rising as demand growth will outpace supply growth."
The reduction in panel supply is also significantly influenced by the LCD business restructuring of domestic panel manufacturers such as Samsung Display and LG Display. Samsung Display plans to exit the LCD TV panel business within this year, and LG Display is also downsizing its LCD TV panel business.
Since Samsung and LG's LCD business restructuring is expected to continue into the third quarter, panel prices are likely to rise further. Market research firm TrendForce projected that, for this month overall, TV panel prices excluding 75-inch panels will increase by at least 6% and up to 10% compared to last month.
TrendForce evaluated, "Panel demand has surged sharply in recent months," calling it a "bull market" rarely seen in the display market recently. They further analyzed, "With the easing of the COVID-19 pandemic and expanded promotions by TV manufacturers, strong panel demand will continue into the third quarter."
The rise in panel prices is also positive for the domestic display industry. It is expected to help improve the performance of LG Display, which still has a high proportion of LCD, and small and medium-sized LCD manufacturers.
LG Display has been recording losses of several hundred billion won per quarter due to falling LCD panel prices and supply disruptions of organic light-emitting diode (OLED) panels. The rise in panel prices could significantly reduce losses in the third quarter. Additionally, the Guangzhou OLED panel factory in China is expected to begin full-scale production this month, which is anticipated to aid performance improvement.
Kwon Sung-ryul, a researcher at DB Financial Investment, analyzed, "LCD TV panel prices have recently entered an upward trend and this trend is expected to continue until October," adding, "With the Guangzhou factory's OLED line operating in full swing in the third quarter and OLED TV demand recovering, operating losses that reached several hundred billion won per quarter are expected to decrease to several tens of billions of won."
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