China's biggest display makers are flexing their pricing power, seeking higher payments for large LCD panels just as Samsung Electronics and LG Electronics are set to ramp up production for the year-end shopping season.
BOE Technology recently told customers it would apply revised prices from the fourth quarter, according to industry sources Tuesday. In a notice, the Chinese display giant cited higher procurement and supply costs caused by fluctuations in raw-material prices and shifts in global supply and demand.
TCL CSOT and HKC have also notified customers of price increases on some panels starting this month, according to industry sources. Samsung, LG and Sony were among the television manufacturers that received the notices.
The final terms will vary by customer and screen size, and it remains unclear whether the higher panel costs will translate into more expensive televisions.
The increases come as panel manufacturers seek to control output and prevent persistent oversupply from depressing prices.
“Major panel makers are planning extended production adjustments to balance supply and demand and support panel prices,” TrendForce said in its latest report, forecasting price changes this month across television panels of all sizes.
Some Chinese LCD factories are operating at around 70 percent of capacity, according to industry estimates. Manufacturers could raise utilization rates and produce more panels, but analysts said they are instead limiting output to stabilize the market.
The timing adds to the pressure. Samsung, LG and other TV makers typically secure panels and build inventory from late summer for Black Friday, Christmas and other year-end sales events. Cutting orders during that period could leave them short of popular models during the industry’s busiest season.
"Display panels account for a significant portion of a television’s manufacturing cost," an industry official said.
If the proposed increases are implemented, set makers will have to absorb the additional expense, seek savings on other components or negotiate higher prices with retailers, the official added.
The impact is expected to be greater on lower-priced televisions, where competition is intense and profit margins are thinner. Manufacturers may struggle to raise retail prices without losing sales, particularly as Chinese TV brands expand in overseas markets.
The strategy reflects China’s growing control over the large-panel supply chain. BOE, CSOT and HKC have expanded capacity over the past decade as competing producers in South Korea, Japan and Taiwan scaled back LCD operations because of weak profitability.
Samsung Display ended LCD production in 2022. LG Display subsequently halted television LCD manufacturing in South Korea and sold its Guangzhou plant, while Taiwan’s AUO and Innolux have also reduced capacity.
BOE, CSOT and HKC now account for an estimated 70 to 85 percent of the market for 65-, 75- and 85-inch television panels, according to industry data. Chinese manufacturers hold an even larger share of certain ultra-large panel categories.
Chinese panel producers have previously supported prices by cutting production. In March 2023, prices for 32- to 55-inch television panels rose 3 percent to 5 percent from the previous month, while 65-inch panel prices climbed as much as 9 percent. The price of a 65-inch panel rose by a further $13 in April of that year.
herim@heraldcorp.com
