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Following the skyrocketing panel prices in August and September, panel makers are quoting another very aggressive price hike in October. The component supply issues including the glass substrates, polarizers, and driver ICs are limiting panel production while TV makers are all wanting to hunt for more panels for the fourth quarter. Given the fact panel makers still cannot fulfill the demand in the next couple of months, it is forecast that panel prices will stay firm or continue to go higher throughout the rest of the fourth quarter.

As none of the TV makers want to give up their panel demand, all panel makers are again encouraged to increase panel prices significantly in October. The increases in panel prices for the 32-inch in October, for instance, will imply that the price fluctuation (price hike) is roughly 75% from the lowest level from last May—the biggest price fluctuation in such a short time in the TV display industry, ever.

It is estimated panel makers will strongly turnaround their finances in the third quarter while TV makers will also gain decent profits at the same time. This means that the profit margin of the entire TV value chain has improved so that the margin distribution across supply chain participants is all positive in this third quarter, which is rare to see in the past. There is less need for retailers and TV brands to promote in the market as consumer demand continues to be strong, especially in North America. As a result, marketing expenses or marketing funds can be largely saved while at the same time, some TV brands started to increase the average selling prices (ASPs) of TVs to some retailers in various marketplaces to avoid depleting their finances quickly.

However, this is going to have some changes in the fourth quarter when TV makers are all running out of low-priced panel inventories built in the second quarter or early third quarter, and the recent increase in panel prices is starting to erode TV makers’ profits. It is forecast that the top tier TV brands who have global coverage and more competitive supply chain resources, in particular for those who have a greater presence in North America and Europe, are riding the wave of strong TV demand resulting from the COVID-19 pandemic. This is a period that changed consumer preferences and buying behaviors, which may be the new normal in 2021; thus, enabling them to grow their TV shipments, gain market shares, and continue to gain profits in the fourth quarter. However, their margins will decline in the third quarter amid increases in panel prices.

Yet, with continued strong demand from the retailer side, top-tier TV makers are prioritizing to drive TV shipments in the fourth quarter to achieve their shipment target for this year but if they can secure the supply of panels.

Recently, some TV makers also successfully increased prices to retailers in developed countries, including North America; they agreed to share some panel price increases as retailers want to refill their pipeline to fulfill consumer demand. Retailers can expect a stronger sell-through in 4Q20 if they can secure enough supply. Although panel prices continue to increase sharply, retailers in the US will not increase TV ASPs by the end of this year. The cost-sharing at the retailer side somehow can ease the increasing financial burden of TV makers.

Moving forward toward 1Q21, there is a greater challenge ahead. Despite the increase in panel prices, the rising uncertainty in the TV display market because of the resurgence of COVID-19, the stimulus policy in the developed countries, the recovery path of emerging markets, and the unbalanced margin distribution across the TV supply chain, the preliminary panel purchasing plans for 1Q21 look firm. However, both retailers and TV makers are increasingly concerned about the much-worsening profit margins in 1Q21, which may pressure them to reset their shipment forecast lower. Consequently, panel demand will be under the risk of a correction.

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