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Chinese LCD production surplus

Post Time:Dec 08,2008Classify:Industry NewsView:420

China-based CCID Consulting has issued its latest numbers on flat-panel TV sales in the country.  CCID data shows that the sales volume of China's flat panel TV in Q3 2008 reached 3.082 million sets, up 110.6% year-on-year.

Q3 is said to be a traditional sales off-season, but this year the market enjoyed favourable growth. However, there’s still a huge production surplus.

In Q3 2008, China's flat panel TV market saw rapid development, with three major reasons: firstly, upstream LCD panel's supply exceeds demand, resulting in price cuts, which stimulated retail sales. 

Second, the Olympic Games enlarged the market size by driving the transition from traditional TV to high definition, flat panel TV in many households around China, pushing up sales, especially for large size flat panel TV.

Thirdly, the Chinese government's initiative in "bringing household electrical appliances to the countryside" drove up demand in the countryside, with colour TV being the major products in this scheme. Government subsidies helped  stimulate country markets' demand.

“Amid rapid changes in the external market environment, CCID Consulting forecasts that in 2008Q4, development trends for China's flat panel TV market will show further falls in prices.  In 2008, there was a surplus for upstream LCD TV panel, reflected in falling prices. Major panel manufacturers reduced production, such as AU Optronics Corp. Chi Mei Corporation, CPTF and LG Display, but was unable to curb the price fall. Currently, 32" LCD panel's average price has broken through $300. 40" and above 40" HD LCD panel's average price has fallen about $10,” says CCID.

LCD TV panel's price accounts for 60%-70% of the overall manufacturing price of an LCD TV. Panel's price drops will drive LCD TV's price drops. A flat panel TV sales “price war is inevitable,” says the study.

The global financial crisis has had a huge impact on the global economy, adds the report, “and the effect is starting to float in China. Flat panel TVs export growth has been restricted since October, with a shrinking capital market holding off fresh investment, hinting at gloomy sales prospects, and lower consumer confidence in China. Urban household expenditure has been reduced, some small and medium manufacturing enterprises have gone bankrupt, and the unemployment rate is rising. These downbeat elements have forced China’s major manufacturers to adjust their market expectation. All these factors point to a slow down of China's flat panel TV market this final quarter of the year, with prospects not much better for 2009.

Source: rapidtvnews.comAuthor: shangyi

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