China’s top television brands still rely on Taiwanese panel makers for niche-size and high-end products, despite the increasing capacity of China’s domestic firms, a research note by Swiss bank Credit Suisse said.
On Tuesday, the top eight Chinese TV-makers signed separate letters of intent in Taipei with the two biggest Taiwanese panel makers — Chimei Innolux Corp (奇美電子) and AU Optronics Corp (AUO, 友達光電) — giving them a total of US$4.5 billion in flat panel orders this year.
Bai Weimin (白為民), deputy director of the China Video Industry Association, said panel procurement from Taiwan will grow 13 percent year-on-year in dollar terms.
“Chinese panel makers are competing with Taiwanese panel makers on certain sizes after the ramp-up of Generation-8.5 fabs, but Chinese TV brands still rely on Taiwanese panel makers for niche sizes and high-end products,” Credit Suisse analyst Jerry Su (蘇厚合) said.
“We think Chinese TV brands’ market share gain in export markets should help Taiwanese panel makers,” he wrote.
The Chinese Video Association forecasts the average selling price of panels will drop 2 percent this year from last year, less than the 20 percent fall seen last year due to the growing size of the average panel sold and higher value-added products used in 3D and LED screens.
The association estimated that China’s TV production will grow 25 percent from last year to 150 million units this year, with 50 million units for domestic consumption and the remaining 100 million for export.
“We continue to expect that the nationwide roll-out of the ‘energy efficiency subsidy’ in China will support Chinese TV demand in the second half of this year,” Su said.
“We think panel prices will improve sequentially in the third quarter of this year, and both AUO and Chimei Innolux will see narrower losses on better pricing and improving shipments,” he said.
According to market advisory firm DisplaySearch, Chimei Innolux and AUO supply 47 percent of the panels used by Chinese TV brands, while the combined share of China’s domestic panel makers has risen to 17 percent.