South Korean , Chinese TV makers set to increase panel purchases in Q3 | 4K/UltraHD | News | Rapid TV News
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Despite concerns regarding demand and falling profit margins, major South Korean and Chinese TV makers are still likely to stock up on display panels in the third quarter of 2018 to prepare for the year-end shopping spree says analyst IHS Markit.

IHSmarkit 10july2018According to its TV Display & OEM Intelligence Service report, the analyst said that the TV makers were already carrying inventories from prior stocking and will have factored in the risk of a correction in panel demand in the fourth quarter.

The report showed that South Korean TV brands’ panel purchasing volume is forecast to increase to 20.4 million units in the third quarter of 2018, up 18% from the previous quarter, 3% on an annual basis. This said IHS Markit was indicative of a recovery in panel purchasing from a decline of 3% in the second quarter on a quarter-to-quarter basis and down 1% year-over-year.

By contrast, the report showed that China’s top five TV brands increased their panel purchasing in the second quarter of to meet their sales target by 0.4% quarter-on-quarter or 18% year-on-year to 19.8 million units. In the third quarter, these Chinese brands are likely to keep their purchasing volumes at a similar growth level of 1% quarter-on-quarter or 17% year-on-year.

“Although the panel demand outlook from South Korean and Chinese TV makers for the third quarter looks positive, the TV brands are still anxious about uncertainty in market demand in the second half of the year while carrying high inventories,” said Deborah Yang, director of display supply chain at IHS Markit. “The TV demand in Europe has particularly been weaker than expected, and the depreciation of local currencies in the emerging markets against the US Dollar has led to a higher price tag in local currencies.”

The TV Display & OEM Intelligence Service report also highlighted another concern in the form of eroding profit margins caused by fast-falling average selling prices of TV sets. “As TV makers, particularly the Chinese brands, keep high inventories on hand, they end up cutting TV prices to manage their inventories, leading to lower margins – even for larger and premium TVs,” Yang added. “If their inventory clearance strategies and upcoming seasonal demand fall short of the expectations, these TV brands will eventually have to cut panel purchasing later in the year to lower the inventory burden.”