As the second quarter comes to an end, the outlook for the TV market doesn't look particularly promising. For instance, take the current situation of China's color TV manufacturers. All five major Chinese TV makers have seen their profits decline, marking one of the worst performances for the color TV market in recent years. But it's not just China’s color TV market that’s struggling. Reports indicate that the global TV market has been underperforming overall in the first half of this year. Major regions like China, North America, and Europe have all witnessed a downturn, leading to an accumulation of unsold products across the industry.
This downturn has had a noticeable impact on inventory cycles. For Chinese color TV manufacturers, the inventory cycle has lengthened from 6 weeks during normal periods to 7.4 weeks, while for overseas manufacturers, it has surged to 10.6 weeks. Even Samsung Electronics, a global leader in TV manufacturing, has had to adjust its annual sales target for 2017 down from 44 million units to the same figure, reflecting the challenges faced by the industry.
The pressure on the color TV market in the first half of 2017 was primarily due to difficulties in managing upstream panel costs and the resulting low profitability. So, can the color TV industry overcome these challenges in the second half of the year?
One of the key reasons for the sluggishness in this year’s TV market stems from price volatility. Since the latter half of 2016, rising costs across various industries have intensified, placing significant pressure on home appliance companies. Both "black goods" and "white goods" have seen price hikes, impacting sales volumes negatively. Additionally, the prolonged cycle of rising panel prices, which persisted for 14 months, has created a consensus in the industry regarding high margins. Furthermore, the fragmented nature of TV brands and the influx of new entrants have amplified the risks associated with these cost increases. Real estate policies have also contributed to the instability in the consumer TV market.
Another factor contributing to the slowdown in color TV performance over the past two years is the aggressive growth of the industry, spurred by internet-based business models. These models helped absorb much of the demand for color TVs ahead of schedule. This, combined with record-high sales figures in 2016, stretched the market’s capacity beyond sustainable levels.
However, starting from the second and third months of this year, panel prices began to stabilize and eventually dropped in most sizes by June. This decline in panel prices has somewhat alleviated the cost pressures on TV manufacturers and could potentially signal a warming up of the TV market in the second half of the year.
It’s worth noting that the upward trend in panel prices earlier this year coincided with a sluggish market. Now, as panel prices loosen and growth slows, the market is beginning to show signs of life. Over the next six months, we might see a gradual tightening of panel prices, which could steer the market toward a more positive trajectory.
According to relevant forecasts, the downward adjustment in panel prices will likely keep the color TV market growing. It’s anticipated that the retail volume of China’s color TV market will reach 53.1 million units, representing a 4.2% increase compared to the same period last year, with sales revenue reaching 164 billion yuan, up 5.1% year-over-year.
The hopelessness of further panel price increases in the second half of the year could help break the nearly six-month "freeze" in the TV market. However, despite falling raw material costs like those of upstream panels, manufacturers must remain cautious about the possibility of another round of price wars in the second half of the year.
For updates on smart TV and set-top box information, check out Smart TV Information Network Sofa Butler (http://), a prominent site in China focused on TV boxes and smart TVs, offering news, resources, and discussions related to smart TVs, set-top boxes, and associated software.
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