Is the flat panel TV market about to tank? Yes say some of the world’s biggest manufacturers who during the past 3 years have witnessed massive growth but are are now claiming declines up to 65%.
KY Lee, chairman of AU Optronics, the world’s third biggest flat-panel maker, told the Financial Times in London that this current downturn meant the industry “cannot expect [future] growth will match what it was in past years”.
“It is obvious that the financial crisis has spread to home users,” Mr Lee said. This makes the current downturn “totally different” from others in the past. AU Optronics said sales had fallen by a third in the space of one month, from October to November.
A survey this week of several Australian retailers reveal that sales of flat panel TV’s have “softened” with vendors now struggling to decide which models will be shipped into Australia next year due to anticipated price rises of between 10 and 20%.
Vendors from LG to Sharp to Sony to Samsung are now saying that the flat panel TV market has become a nightmare. Earlier this week an Executive Vice President of Investor Relations at Samsung Chu Woo Sik, said The company is “struggling very hard” to make money from LCDs and falling prices have evaporated profitability from TVs, he said.
Sony has said that they are anticipating a 12% downturn in flat panel TV sales.
During the past 4 months the price for flat-panel TV and computer monitors have fallen rapidly as consumer demand has evaporated rapidly as a result of the financial crisis.
Manufacturers like Sharp, Panasonic and key OEM manufacturers like AU Optronics and Chi Mei Optoelectronics who make over 30% of the world’s flat panel TV’s have scaled back expansion plans and have left parts of their factories idle as orders shrink dramatically.
Taiwanese and Chinese flat panel TV maker’s manufacturers who account for over 55% of all flat panel TV production claim that they are down 65% per cent from a year ago.
Industry executives and analysts now expect global sales of flat-screen computer monitors to decline next year for the first time since they were invented about a decade ago.
Flat-screen TVs, still the single-biggest segment of the LCD market, has been driving recent growth.
But with demand falling sharply, prices have plummeted.
A 32-inch panel now costs almost half of what it did a year ago, according to WitsView, a Taipei-based research consultancy.
For some panel sizes, prices are now so low that they have become a losing proposition for panel makers. AU Optronics said it and other manufacturers had turned down orders from one large company because it was insisting on below-cost price.
According to the Financial Times That is very different from just a year ago, said Mr Lee, when “we could say that we were making a good profit from all [screen] sizes”.
Mr Lee said he was confident that demand would eventually pick up again and that idle factories would not become “a normal situation” for the industry. He cites the fact that there are some 2bn cathode ray tube television sets worldwide still to be replaced by flat-screen TVs.
Mr Lee’s company noticed the first signs of trouble in June when TV and monitor brands started cutting forecasts after a collapse in consumer demand. “Nobody wants to spend money anymore,” Mr Lee said.
