- Samsung, LGE, and Sony gained market share and increased their shares of LCD TV shipments by an average of 11% Y/Y in 2014, which is higher than the market average. According to IHS (NYSE: IHS) the top three TV brands purchased more than one third (37%) of the total global TV panel supply in 2014, and they will continue to increase their share this year. Overall, the top three brands are expected to grow their LCD TV shipments 16% Y/Y, to reach 110 million units or 42% of all TV panel shipments from their suppliers in 2015.
- “Based on very optimistic shipment targets, the panel-allocation dominance of these three companies—Samsung, in particular—will be even more pronounced, which will put more pressure on smaller competitors,” said Deborah Yang, display supply chain research director for IHS Technology, formerly DisplaySearch. “The three leading TV manufacturers will, therefore, have greater influence over the global panel supply this year, causing panel makers to list them as first priority customers.���
- In the LCD TV industry, the companies controlling panel allocations during a shortage will garner the most market share. Companies that purchase panels at competitive prices during an over-supply can also save on costs, which helps raise profits. TV makers also prefer a shortage to an over-supply, because a shortage can stimulate consumer purchases; in an over-supply situation, prices fall quickly, which encourages consumers to postpone purchases, while they wait for even better bargains.
- “For Samsung, LGE, and Sony, it makes sense to obtain large allocations and make the market tighter, especially when they dominate purchasing and can influence panel allocations,” Yang said. “Meanwhile, panel makers are encouraged to support them, because they must look for long-term winners, rather than just supporting smaller, niche players.”
- The top three TV brands’ influence over certain panel sizes will also increase this year, according to the Quarterly LCD TV Value Chain & Insight Report from IHS. Based on 2015 LCD TV manufacturers’ business plans, the top three players will use more than half of all panel allocations for six of the most popular panel sizes. If there are shortages, other TV manufacturers will have difficulty obtaining allocations for these sizes.
“For 48", 49", and 58" sizes in particular, the purchasing power of the three TV market leaders is very strong,” Yang said. “As panel allocations for the largest companies become even bigger, smaller players could be forced to take a niche approach or be squeezed out entirely."
A graph showing the 2015 share of global panel supply for various TV brands.