The reduction in panel demand is intended to cut inventory that was carried over from previous quarters. In addition to concerns about TV demand and falling profit margins, the intensifying U.S./China trade war has made the TV makers more hesitant about issuing firm demand forecasts.
“There’s an increasing risk of a demand correction in the second quarter in light of several negative indicators from TV brands, including rising inventories, order cuts and increasing tariffs,” explains Deborah Yang, director of display supply chain at IHS Markit. “These signs imply a slowdown in the market and a possible downward trend for panel prices.”
Korean orders decrease modestly
South Korean TV brands’ panel purchasing volume is forecast to decline modestly to 17.3 million units in the second quarter of 2019, down 3 percent from the previous quarter or a 1 percent decline from one year ago. This is indicative of weakness in panel purchasing following a decline of 2 percent in the first quarter on a quarter-to-quarter basis and no change on a year-on-year basis.
Chinese firms with more conservative purchasing plans
China’s top-five TV brands already bought more panels than expected in the fourth quarter of 2018 after winning further price concessions for the first quarter of 2019 in exchange for placing volume deals with strategic panel suppliers. These brands had stronger-than-forecasted purchasing volumes in the first quarter of 2019, amounting to 20.6 million units, a decline of 13 percent quarter-on-quarter or a 5 percent increase year-on-year.