IHS Sees Major TV Brands Continuing to 'Stock Up' on Panel Purchases in Q3

Despite concerns about weakening consumer TV demand and falling profit margins, major South Korean and Chinese TV makers “are expected to stock up” on display panels in Q3 to “prepare for the seasonal year-end shopping spree by consumers,” said IHS Markit Tuesday. South Korean TV brands’ panel purchasing volume is forecast to increase to 20.4 million units in Q3, up 18 percent from the previous quarter and 3 percent higher from a year ago, said IHS. “This is indicative of a recovery in panel purchasing from a decline of 3 percent in the second quarter on a quarter-to-quarter basis and down 1 percent year-over-year.” China’s top five TV brands, which bought more panels than expected in Q1, again increased their panel purchasing in Q2 by 0.4 percent quarter-on-quarter and 18 percent year-on-year to 19.8 million units, it said. “In the third quarter, these Chinese brands are likely to keep their purchasing volumes at a similar growth level of 1 percent quarter-on-quarter or 17 percent year-on-year.” Though the outlook for panel demand looks positive, most TV brands “are still anxious about uncertainty in market demand in the second half of the year while carrying high inventories,” said IHS. TV demand in Europe “has particularly been weaker than expected,” it said. Eroding profit margins from “fast-falling” TV average selling prices is another worry, the researcher said: “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. 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.”