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Low-Tier TV OEMs in China Face Competitive Challenges
May 17, 2016 | IHSEstimated reading time: 2 minutes
Following the global slowdown in worldwide television demand growth, TV makers in China are finding it difficult to grow profitably. Many low-tier TV makers in China that rushed into the market and recorded impressive shipment growth only a few years ago are now facing challenges. Unit shipments from low-tier original equipment television manufacturers (OEMs) in China in 2015 grew 9 percent year over year in 2015. The BOE Group’s original design manufacturer (ODM) strategic business unit led the shipment growth of low-tier OEMs in China, as AMTC, HKC, KTC and other volume players suffered declines, according to IHS Inc. (NYSE: IHS),the leading global source of critical information and insight.
“TV OEMs in China are still hoping for strong shipment growth in 2016, but that hope could turn out to be overly optimistic,” said Nick Jiang, display supply chain senior analyst at IHS Technology. “The TV market has become saturated, and competition between OEMs and branded companies continues to intensify, which is making profits harder to achieve.”
OEMs in China are finding it increasingly difficult to compete against BOE, in particular, because the company is committed to growing its TV assembly business and completing a fully integrated display business within the BOE Group. BOE’s TV OEM business is expected to squeeze out other low-tier Chinese TV makers in 2016 and pressure others to reduce costs, especially for 19-inch, 24-inch, 32-inch and 43-inch sizes.
In the first half of 2016, BOE’s TV set division aims to upgrade its TV size mix to include 55-inch and other larger displays, in a move to supply a greater quantity of large panels to the market in the future. “BOE’s TV OEM business will need to quickly catch up and make itself competitive in large-screen TV manufacturing, but it will take some time for the company to convince customers that it is capable of supplying the needed volume and with the required quality,” Jiang said.
“A shakeout among low-tier Chinese TV makers is expected,” Jiang said. “Unlike BOE, with its own sustainable panel supply resources, and Tongfang Global with licensed brands in its business model, most other OEMs in China are finding it difficult to compete in the TV market. Margins have been squeezed badly, under pressure from top-tier Chinese TV makers like TCL, Skyworth and Changhong, which have been aggressively growing their TV OEM businesses.”
About IHS
IHS is the leading source of insight, analytics and expertise in critical areas that shape today’s business landscape. Businesses and governments in more than 140 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs nearly 9,000 people in 33 countries around the world.
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