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Panel Prices Rising in March
March 08, 2020
Notebook panel prices have been rising in March by between 0.5% and 0.75% while monitor panel prices are up between 0% and 0.3%, both of which seem to reflect the production issues from COVID-19. TV panel prices however have the double whammy of both the effects of the virus on TV panel production capacity and the lingering effects of the South Korean panel fab closings mentioned above, which leads us to expect TV panel price increases ranging from ~1% to almost 6%. We do note that the effects of the virus on panel production are definable and will lessen as the infection rate in China (and hopefully South Korea) decline, but the effects of TV panel fab closings or planned capacity reductions are as much psychological as physical.
Buyers must meet quotas, regardless of whether they believe they are realistic under current circumstances, and the fear of missing those quotas for any reason causes them to accept the TV panel price increases that panel producers have been waiting for since the middle of last year. Panel producers have been selling many products at or below cash costs and the necessity to push prices up for any reason is a financial one that must be met. Buyers understand that they have been in control of TV panel pricing for much of the last 12 months and will give in to price hikes at least during the virus outbreak, but each monthly rise means TV brands will be seeing higher costs, competition for the same number (or less) customers, which means either giving up margin or being unable to offer the discounting expected by consumers.
These effects take time to ripple through the supply chain and reach consumers so near-term TV sell through data will reflect demand changes more than price changes but within 90 to 120 days higher priced TVs will hit the markets, which will have a dampening effect on sales. Luckily these TV set price increases would fall into the summer months, typically a slower sales period for TVs, but should TV panel price increases continue for a few more months, it would extend those set price increases into the holiday period and give consumers pause when deciding whether to upgrade to newer or larger sets. We believe there will be a leveling off of TV panel prices over the next two months as the viral infection rate in China recedes, but much will depend on how the rest of the world deals with the spread of COVID-19, and thus far it seems that countries other than China are just waking up to the potential for the spread of the infection.
Panel Prices Rising in March
March 08, 2020
Notebook panel prices have been rising in March by between 0.5% and 0.75% while monitor panel prices are up between 0% and 0.3%, both of which seem to reflect the production issues from COVID-19. TV panel prices however have the double whammy of both the effects of the virus on TV panel production capacity and the lingering effects of the South Korean panel fab closings mentioned above, which leads us to expect TV panel price increases ranging from ~1% to almost 6%. We do note that the effects of the virus on panel production are definable and will lessen as the infection rate in China (and hopefully South Korea) decline, but the effects of TV panel fab closings or planned capacity reductions are as much psychological as physical.
Buyers must meet quotas, regardless of whether they believe they are realistic under current circumstances, and the fear of missing those quotas for any reason causes them to accept the TV panel price increases that panel producers have been waiting for since the middle of last year. Panel producers have been selling many products at or below cash costs and the necessity to push prices up for any reason is a financial one that must be met. Buyers understand that they have been in control of TV panel pricing for much of the last 12 months and will give in to price hikes at least during the virus outbreak, but each monthly rise means TV brands will be seeing higher costs, competition for the same number (or less) customers, which means either giving up margin or being unable to offer the discounting expected by consumers.
These effects take time to ripple through the supply chain and reach consumers so near-term TV sell through data will reflect demand changes more than price changes but within 90 to 120 days higher priced TVs will hit the markets, which will have a dampening effect on sales. Luckily these TV set price increases would fall into the summer months, typically a slower sales period for TVs, but should TV panel price increases continue for a few more months, it would extend those set price increases into the holiday period and give consumers pause when deciding whether to upgrade to newer or larger sets. We believe there will be a leveling off of TV panel prices over the next two months as the viral infection rate in China recedes, but much will depend on how the rest of the world deals with the spread of COVID-19, and thus far it seems that countries other than China are just waking up to the potential for the spread of the infection.
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Barry Young
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