TV Shipments Soften, Leading to Growing Concerns About Inventory

Wednesday, December 1st, 2010
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Global TV Shipment Growth Slows to 9% Y/Y from 26% Y/Y in Q2’10, with Western Europe and North America Showing Some Weakness; Emerging Regions Overtake Developed Regions in LCD TV Unit Volume for First Time

SANTA CLARA, Calif. — After several quarters of mid-20% year-over-year growth, the pace of global TV shipment growth slowed to 9% Y/Y in Q3’10, according to the latest findings from the latest DisplaySearch Quarterly Advanced Global TV Shipment and Forecast Report. Shipments of 59.8 million was a little better than expected, but it was apparent by the end of the quarter that continued sell-through weakness in North America and softer sell-through of TVs during the World Cup in Western Europe have led to increased finished TV set inventory. Even China, which has been a very hot growth market for LCD TVs in recent years, had increased inventory ahead of the Golden Week holidays in October, although good sales during the holiday period eased the pressure.

Most TV technologies, with the exception of the shrinking CRT TV market worldwide, saw positive Y/Y growth. Plasma TV shipments were up by 35% Y/Y to more than 4.8 million units. LCD TV shipments also posted positive growth, rising 22% Y/Y to 45.7 million units. DLP rear projection TVs, which are sold only in North America, posted positive annual growth in Q3’10 as consumers concentrate on value during a painfully slow economic recovery. Despite this, it was the weakest quarter of annual shipment growth since Q4’08 when the global economic crisis significantly reduced global spending on TVs.

“Consumers are clearly focusing on value right now, which is one of the reasons why plasma TV growth has been so strong this year after a 1.5% global shipment decline in 2009,” noted Hisakazu Torii, Vice President of TV Research for DisplaySearch. Torii added, “LCD TV panel prices remaining so steady during the first half of the year, which translated to relatively stable retail prices, and there was an increase in higher-priced LED-backlit models in the LCD TV mix. Both of those LCD TV trends mean that plasma TVs have enjoyed an increasing price advantage this year at comparable sizes. This resulted in 39% Y/Y plasma TV unit growth in North America during the first three quarters of 2010, while 40″ and larger LCD TV units have risen just 16% during the same time period.”

Table 1: Q3’10 Worldwide TV Shipments by Technology (000s)

             Q3'10       Q3'10     Q/Q     Y/Y 
Technology   Units  Unit Share  Growth  Growth
----------  ------  ----------  ------  ------
LCD TV      45,669       76.3%      9%     22%
PDP TV       4,838        8.1%      8%     35%
OLED TV        0.2        0.0%    -52%     11%
CRT TV       9,282       15.5%     -6%    -32%
RPTV            36        0.1%     38%      9%
            ------  ----------  ------  ------
  Total     59,826        100%      6%      9%

Source: DisplaySearch Quarterly Advanced Global TV Shipment and Forecast Report

By region, North America returned to positive Y/Y growth after a small decline in shipments during the previous quarter, although at 3%, the increase was not strong. In Western Europe, sales growth abruptly turned negative, falling from 43% Y/Y growth in Q2’10 to a slight decline of 1% Y/Y in Q3’10, as optimistic shipments ahead of the World Cup were met with disappointing sell-through results, leading to an inventory correction in Q3’10. China also turned from positive to negative shipment growth, falling 2% Y/Y in Q3’10. Not all regions were trending negative, however, as Japan’s TV shipments rose 62% in Q3’10, a better pace of growth than in Q2’10 as the government–sponsored Eco Points program continued to result in strong consumer demand.

For the first time, the LCD TV unit shipment volume in emerging regions, which includes Eastern Europe, China, Asia Pacific, Latin America and Middle East and Africa, surpassed that of the traditional developed regions of North America, Japan and Western Europe. The annual growth rate in these emerging markets has been far greater due to lower household penetration and more affordable pricing. Through the first three quarters of 2010, emerging markets have grown in LCD TV shipment volume by at least twice the rate of developed regions.

LED Backlights Continued to Gain Share in LCD TV Shipments, Although Pace Slows

After more than doubling in Q2’10, the share of LED backlights in LCD TV shipments increased just 5 percentage points to 23% in Q3’10. LED-backlit LCD TVs still carry a significant premium over CCFL-backlit counterparts. Although the premium is dropping, up-selling this technology to consumers has been difficult in the current economic environment. In some regions, like North America, the LED share stopped growing in Q3’10, remaining at 21%. The price premium for LED-backlit LCD TV panels is falling quickly, so the retail price gap should narrow considerably in Q4’10.

Samsung #1 Global TV Brand, Leading in LCD and #2 in Plasma; Top Five Unchanged

Samsung was the #1 brand on a revenue basis in every region it operated in, with the exception of China where domestic brands dominate. Samsung did, however, fall to #2 in LCD TVs on a unit basis in North America where surging shipments led Vizio to #1. Samsung’s global TV market share, on a revenue basis, fell about 3 percentage points in Q3’10 to 21.3%, mainly as a result of share growth by #5-7 brands.

LGE was the #2 brand worldwide at 14.0%, down about a point from Q2’10. LGE was #3 in both LCD and plasma TV revenues, but led global CRT TV revenues with almost double the revenue share of any other brand. Sony rounded out the top three brands in global flat panel TV revenues during Q3’10, also falling by about a percentage point to 11.3%, but posting stronger Y/Y revenue growth than either LGE or Samsung. Only Sharp had stronger annual TV revenue growth, based on the strong growth in Japan, where Sharp is #1. Panasonic was the #1 plasma TV brand, and #4 overall.

Table 2: Q3’10 Worldwide Flat Panel TV Brand Rankings by Revenue Share

                       Q2'10   Q3'10     Q/Q     Y/Y
Rank           Brand   Share   Share  Growth  Growth
----  --------------  ------  ------  ------  ------
1     Samsung          24.4%   21.6%     -9%      7%
2     LG Electronics   14.1%   13.5%     -1%     25%
3     Sony Corp.       12.8%   11.8%     -6%     25%
4     Panasonic         9.0%    9.1%      4%      4%
5     Sharp Corp.       6.4%    8.0%     29%     49%
      Other            33.4%   36.0%     11%      5%
                      ------  ------  ------  ------
        Total         100.0%  100.0%      3%     13%

Source: DisplaySearch Quarterly Advanced Global TV Shipment and Forecast Report