The global TV market will take a hit due to the COVID-19 outbreak in 2020. Out of the top global brands, Samsung, which has TV manufacturing facilities in Hungary, Czech Republic, Mexico and Vietnam, was relatively less affected at the beginning of the outbreak. But with Hungary closing its borders and the Czech Republic locked down, Samsung may face difficulties operating its European facilities. Samsung’s Vietnam production line has not faced any issue so far. LG display’s manufacturing facility in Gumi and Paju in South Korea has not reported any slowdown yet, except a minor lockdown in the Gumi research facility, so LG’s panel supply should stay normal.
Xiaomi reported it will be cutting its domestic (China) TV supplies by 20% this month, and between 10-15% in April this year. TCL’s panel manufacturing subsidiary, CSOT has its facility in Wuhan and Wuhan being the epicentre of COVID-19 outbreak, TCL is likely struggling to run the panel manufacturing facility. Last year TCL shipped 32 Mn TVs globally, but in 2020 it will likely see around a 10% decline due to the panel supply shortages and lower global demand. Hisense also assembles TVs in Hungary, so may face similar issues to Samsung. But its Guangdong facility is coordinating with other factories to ensure the supply.
Other brands, using panels from companies including TCL, Skyworth, BOE in their TVs will also be affected as the Chinese manufacturing sector slows down after the outbreak. Due to this manufacturing slow down, the panel prices are likely to rise by around 10%, which may increase the price of the finished good. However, the expected lack of demand will likely offset this.
Taiwanese panel producer, AUO said its production operation was not much impacted by the pandemic, 95% of its production capacity in China has resumed. Thus, it is not changing its outlook for 1Q 2020. However, if the coronavirus continues spreading across the world, consumer demand will be impacted from 2Q 2020.
As COVID-19 further spreads, global markets, especially North America and Europe, will face demand-side issues. People may postpone purchase decisions due to economic uncertainty and to avoid social interaction. It is apparent that many western countries are not able to control the outbreak as effectively as China has done. This will lead to extended periods of business disruption and the potential for greater falls in demand. One usual stimulus of TV purchasing, is the Olympic Games. While not yet cancelled, we see this as highly likely, thus removing an upgrade trigger.
Weak demand in North America and Europe in H1 2020, will likely lead the TV market to decline as much as 15% y/y globally. In H2 2020, we are assuming there will be a recovery with the global TV market regaining momentum before recovering in 2021.
