According to the latest report from IHS Markit, panel purchases by South Korean TV brands are estimated to have declined 4 percent in the second quarter of 2017 compared to the previous quarter, and down 4 percent compared to the same period last year. Panel purchases by China’s top six TV makers -- ChangHong, Haier, Hisense, Konka, Skyworth and TCL -- are forecast to decrease by 9 percent quarter on quarter and to plunge 18 percent year on year.

“The correction in the second quarter was necessary as TV brands had planned somewhat excessive panel purchases to prepare against the on-going panel supply constraint expected for this year,” said Deborah Yang, director of display supply chain at IHS Markit. “Also, TV makers, most particularly Chinese brands, actually had to lower panel purchases due to their increasing inventory, financial burden, and less aggressive TV shipment targets for this year.”

Looking ahead, however, TV brands’ demand for panels are expected to pick up in the third quarter as they aim to meet their 2017 shipment targets -- South Korean and top Chinese TV makers are forecast to increase the purchase by 25 percent and 27 percent, quarter on quarter, respectively.

In particular, Chinese TV makers, while they still carry high inventories, are expected to maintain strong panel purchases throughout the fourth quarter of this year. This is due to their desire to retain market share, particularly when competition in the Chinese TV market becomes more intense with Sharp’s aggressive return to the market.

“TV makers are in the dilemma, striving to find a balance between their top- and bottom-line targets. They need panel purchasing plans that match their strategies. To gain market share, they have to secure more panels, but to prioritize profits, they need to purchase fewer panels,” Yang said. “It seems that TV makers, including global-leading brands, are seriously considering cutting shipment targets for this year, but they have not taken any decisive action yet. It is believed that they will make their decisions based on the outcome of upcoming pricing negotiations with panel makers.”