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According to the latest “TV Display & OEM Intelligence Service” from IHS Markit, the comparison of worldwide TV panel shipments and TV manufacturer set shipments reveals a shipment gap. On a practical basis, three to four weeks of panel safety buffer, a panel supply that is at least 6 percent higher than demand, and adequate lead-time are required for the smooth production of TVs.
TV makers and panel manufacturers have similar single-digit shipment growth targets for 2018. These targets indicate that supply and demand could become more sensitive to changes in TV makers’ shipment plans or panel makers’ supply availabilities, as well as the inventory in the pipeline and panel price trends.
There will be more Gen 10.5 capacity coming on stream, so that the supply base for large displays, including 65 inches, will continue to improve. Adoption of larger TVs in the consumer market takes time, because growth comes mainly from consumers replacing their TVs. The industry is experiencing a supply-push market, and panel makers will be pressured to push out panels to speed up migration.
Panel makers are enjoying more supply chain bargaining power in the third quarter of 2018, and this power is likely to remain until the middle of the fourth quarter. A demand correction is more likely in the fourth quarter, if pipeline inventories are not consumed and inventories become an issue for panel makers in the first quarter of 2019.
Though panel prices are rebounding in the third quarter of this year, the long-term LCD TV business outlook may be shaky for Korean and Taiwanese panel makers, considering the intensifying competition from China. As a result, some panel makers are expected to be more aggressive in restructuring or converting existing LCD capacity to more advanced premium-display technology, focusing on larger sizes and OLED/QD OLED TV panel production. These business scenarios are still in the discussion phase and are not expected to be implemented soon, which is likely to affect the supply-demand outlook in 2019.
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