Go up and up! This industry welcomes the longest price increase cycle in history! Some products rose more than 100%

From the second half of last year, panel prices continued to rise, until the beginning of this year, the entire industry ushered in the longest price increase cycle in history. What are the reasons for pushing up prices? What will happen to the next market?

The prices of LCD panels continue to rise and the prices of mainstream models double within a year.

Wang Hai, vice president of Shenzhen Skyworth-RGB Electronics Co., Ltd.: in the whole industry, the rise in panel prices will still have a certain impact. Since July last year, in terms of size, the small sizes of 32 inches and 43 inches have increased by about 80%.

Panel price is one of the most common topics that Wang Hai and his colleagues talk about recently. Since the second half of last year, LCD panel prices have continued to rise, and quotations have been updated more and more frequently, which has had a great impact on Wang Hai's color TV company.

Huatai Securities Research report shows that as of late February 2021, the current mainstream 32-inch, 43-inch, 55-inch and 65-inch LCD TV panel prices have increased by 119%, 81%, 84% and 46% respectively compared with May 2020.

Hu Peng, General Manager of Public Communication Department of TCL Technology Group Co., Ltd.: since February, panel prices have risen faster than expected. This panel price increase, I think the continuous tight relationship between supply and demand is the main factor. On the supply side, it is mainly affected by the continuous shortage of upstream supply chain, glass substrate and electronic components, and on the demand side, it is mainly affected by the strong demand downstream.

Since last year, under the background of the outbreak of "home economy" in overseas markets, the retail market of color TV sets in Europe and the United States has performed strongly. In the domestic aspect, the demand for products such as televisions and notebooks is still strong, and these factors directly drive the shipment of panels. At present, in order to cope with the rising price tide, the willingness of the whole machine manufacturers downstream of the panel industry to prepare goods is still relatively strong.

Wang Cheng, CEO of TCL Industrial Holdings Co., Ltd.: the supply of panels is somewhat rigid. I think the situation that supply exceeds demand in the middle will continue for some time, possibly to the third quarter or even the fourth quarter of this year.

On the supply side, domestic panel manufacturers continue to release new production capacity, South Korean manufacturers capacity exit progress and other factors directly affect the global panel shipments. The industry expects that the actual supply area of the global LCD panel will grow by less than 5% in 2021 compared with the same period last year, and the imbalance between supply and demand may push up panel prices further.

Wang Cheng, CEO of TCL Industrial Holdings Co., Ltd.: the supply of panels is somewhat rigid. I think the situation that supply exceeds demand in the middle will continue for some time, possibly to the third quarter or even the fourth quarter of this year.

On the supply side, domestic panel manufacturers continue to release new production capacity, South Korean manufacturers capacity exit progress and other factors directly affect the global panel shipments. The industry expects that the actual supply area of the global LCD panel will grow by less than 5% in 2021 compared with the same period last year, and the imbalance between supply and demand may push up panel prices further.

Hu Jian, head of the electronics industry at Huatai Securities Research Institute: we expect the total global LCD capacity supply to grow by 3.3% year on year in 2021, and the demand side to grow by 3.27% year on year. The supply and demand pattern of the industry is also expected to show a tight balance. The current price level is in line with the industry's high in 2017, and this round of panel price increases are expected to continue at least until the first half of this year, while prices are expected to remain at a high level for the whole year.

Panel factory full production and full sales inventory to create a new low downstream machine factory procurement pressure surge.

The relationship between supply and demand of panels is the key to judge the price trend. How about the production and shipment of panel manufacturers at present?

This warehouse is one of the main warehouses of a panel manufacturer in Shenzhen. In the first quarter of last year, it was also filled with various models of panels, but factories have been shipping faster and faster since April, and inventories are now at an all-time low.

Huang Feng, Chief of Shenzhen warehousing Section of Logistics Department of TCL Huaxing Optoelectronic Technology Co., Ltd.: before, the goods were stored in the warehouse, and when the stock water level was the highest, it was necessary to rent the warehouse to store the goods. Now all our external leasing positions have been emptied, and the inventory level of our factory is also at an all-time low.

Outside the warehouse, the reporter saw two or three trucks waiting to be loaded, and the drivers of several cars had been waiting for several hours. Huang Feng is no stranger to such a situation. He told reporters that since the second half of last year, the company's production line has been running at full capacity, but it is still unable to meet the supply.

Huang Feng said that all the employees are now on duty, working two shifts 24 hours a day. But the inventory turnover rate is very fast, so fast that the product has not yet been produced, and the car is already waiting, which is equivalent to zero inventory.

There are also color TV companies with low panel inventory, and the shortage of raw materials has become their top concern recently.

Xu Zongyi, deputy general manager of supply chain center of Shenzhen Skyworth-RGB Electronics Co., Ltd.: panel safety inventory has dropped by more than 30% compared with last year. Panel capacity is relatively excess in the past few years, so there is more inventory, and suppliers want us to take more goods. The situation is completely different this year, waiting for the supplier to arrange the plan.

To promote production and delivery, this situation has been widespread in the panel industry chain, and the profits of panel enterprises have been generally improved. At present, China has become the largest producer of LCD panels, and almost all of the leading domestic enterprises have been in a state of full production.

Du Zhijun, Research Director of Shenzhen Rongshu Investment Management Co., Ltd.: in June 2020, according to the prices at that time, most panel factories were losing money, so prices are now recovering. For the entire production capacity of panel enterprises, while prices rise, if full production can be achieved, the profits of the enterprise will be very good.

The tide of price increase takes the place of price war. Color TV manufacturers are planning a new round of price increases.

In this round of panel price increases, the major color TV manufacturers are the most affected. During the Spring Festival, color TV sales have entered the peak season. As LCD panel prices continue to rise, will color TV prices continue to rise?

It is understood that the monitor can account for more than 50% of the cost of an LCD TV. For TV companies, the impact of rising panel prices can not be ignored, the rate of increase is increasing, TV manufacturers are difficult to digest themselves.

While the cost pressure of color TV enterprises is increasing, product sales have once again entered the peak season. Industry insiders told reporters that what is different from previous years is that after the Spring Festival, there is no very obvious cooling in the color TV market, and the heat is much higher than in previous years.

Xu Wenlong, director of procurement and sales of SUNING's audio-visual multimedia operation department in Shenzhen, said that since the beginning of the New year's Festival, the sales of large screen products of 75 inches and above have increased by 63%, and this trend of strong sales has been continued after the Spring Festival. Overall sales, some brands increased by 413%.

In front of the hot market, some color TV companies have also quickly raised the retail price of their products. According to Oviyun.com, in January this year, the retail sales of color TV sets in China reached 3.3 billion yuan, an increase of 17.6% over the same period last year. At the same time, the average price of color TV sets also rose, with an average offline price of 4573 yuan, an increase of 22.3% over the same period last year.

Xu Wenlong said that since the third quarter of last year, the price of color TV has been rising. As far as the market is concerned, there is no room for the manufacturer's price war, which actually brings opportunities for transformation and upgrading to the color TV industry.

According to Guohai Securities research data, in the first quarter of 2021, the purchase of LCD panels by Chinese TV manufacturers is expected to grow by 6% month-on-month and 13% compared with the same period last year, and the increase in manufacturers' procurement plans is expected to continue to expand in the second quarter. Under the background of continuous tight supply and demand of panels, the color TV industry is bidding farewell to the price war, and some color TV machine manufacturers are ready to raise prices further.

Wang Hai, vice president of Shenzhen Skyworth-RGB Electronics Co., Ltd.: the price increase of color TV sets will be slow compared to the cost, and the retail price at the terminal may take a month to rise, while the prices of screens and materials have already risen ahead of schedule.

Wang Cheng, CEO of TCL Industrial Holdings Co., Ltd.: objectively speaking, because of the sharp rise in upstream raw materials and the shortage of many key materials, we also have to raise terminal retail prices. I think this is a hedge against the rising consumer demand in many markets around the world.