Home LCD TVs (29-inch and above)

	The TLM42T08GP from mainland China's Hisense features a 42in LED-backlit LCD with 40,000:1 contrast ratio.

China’s LCD TV suppliers are redefining their business strategy in a bid to gain better control of core technologies and their associated costs, and ultimately boost the region’s overall competitiveness in this robust line. Having been largely dependent on the supply of LCD panels, many China suppliers, especially tier-one companies, have started creating their own LCD module production lines. Meanwhile, medium- and small-scale makers that do not have the capability to produce their own LCD modules are adopting different purchasing strategies to minimize the negative effect associated with fluctuating LCD module prices.

This change in business model and strategy is primarily brought about by the fierce price competition and lack of control of both the supply and cost of LCD panels. In early 2008, foreign LCD TV panel makers enlarged their output to avert a potential shortage of LCD TV panels. Some LCD TV suppliers secured a large stock of panels for storage in anticipation of a shortage. After the usual weak sales season in Q1 2008, prices of LCD TV panels started going down. Although some panel makers reduced their output in April 2008, prices of panels continued to fall. According to research firm WitsView, prices of most sizes of LCD TV panels decreased by at least 15 percent from June to September 2008. The price of a 32in widescreen panel declined from $315 in June 2008 to $250 in September 2008, a reduction of about 20 percent. Although the price slide helped reduce makers’ manufacturing cost to a degree, LCD TV suppliers with huge panel inventories bought at previous prices were not able to take advantage of the price freefall.

During H1 2008, Japan and South Korea LCD TV manufacturers declared a price war with China makers, implementing 30 percent price reductions at most. Equipped with their own panel production lines, these large companies can effectively control supply and cost of panels, thereby putting China makers at a disadvantage.

China’s tier-one LCD TV makers, anticipating such situation, were able to cushion the impact on their sales through their own LCD module supply. These companies have started building their own facilities for LCD panel production. Some of Hisense Electric Co. Ltd’s production lines are already in operation. Other companies’ facilities are expected to be operational in the coming months.

It is the small- and medium-scale companies that were more seriously affected. Unlike large LCD TV companies, these suppliers usually do not have long-term relationships with material and component suppliers, and thus, are not able to adjust the prices of their LCD TVs in response to changes in the cost of these materials and components, including LCD panels. Also affected are makers that ordered a large number of LCD panels in anticipation of the supply shortage.

As a countermeasure, more makers are adjusting their procurement strategies, purchasing LCD panels only when the number of orders is finalized or when the contract has been signed. Some makers are also establishing long-term relationships with panel suppliers to secure stable supply and favorable prices.

Through these efforts, China’s LCD TV makers are optimistic of the industry’s continued growth. China customs statistics indicate that the country’s exports reached 11.67 million units in H1 2008, posting a y-o-y increase of 54.9 percent. China’s LCD TV export revenue for the same period increased by 58.9 percent at $3.63 billion.

In terms of exports, Western Europe, North America and Hong Kong are the major destinations of China’s LCD TVs. The Middle East, South America and Eastern Europe are the fastest growing markets for LCD TVs. Since North America and Western Europe already have a high concentration of flat-panel TVs, many China makers are eyeing emerging markets, such as India, Mexico and Russia, for market expansion.
Large players explore LCD module production
LED backlight module another product
Large screens, HD emphasized
Marketing strategy key to supplier expansion

To reduce production cost, boost competitiveness and increase profitability, leading suppliers of LCD TVs in China are making their move toward being able to produce their own LCD modules. These suppliers include Hisense, Skyworth Group Co. Ltd, Konka Group Co. Ltd and TCL Corp.

Hisense already has three operational production lines for mass-producing LCD modules. One of these lines is China’s first LED backlight LCD module production line.

At present, Hisense achieves a yearly output of 1.5 million LCD modules in its 16,000sqm facility. The company is currently building another two module production lines, which are expected to raise its output to 3 million modules in 2009.

Skyworth has announced plans to produce its own LCD modules. In April 2008, the company established a partnership with LG Display and invested in the latter’s LCD module factory in Guangzhou, Guangdong province. Both companies also set up a new R&D company, and are planning to build a new LCD TV factory beside the module factory.

TCL, together with Samsung, started construction of an LCD module plant in Huizhou city in Guangdong in April 2008. In the first phase, the plant is projected to produce 2.33 million units a year. In September 2008, TCL announced it will infuse additional $146.45 million for this project. Fifty percent of the fund will be used for large-screen LCD module production, and the other half will be for medium and small modules.

Konka announced in September 2008 that it will invest $129.76 million to set up an LCD module company. This new company will have eight production lines that will produce an annual output of 2.4 million units.

	The BT-5231 52in full-HD LCD TV from M. Bux of Hong Kong has a USB port and memory card slots.

With more flat-panel TV suppliers keen on producing upstream LCD modules by themselves, holding the key technology for module processing is increasingly becoming the top product development concern for most makers.

Hisense is leveraging its head start in this area. The company’s LED backlight LCD module plan was supported by the Ministry of Industry and Information Technology’s development fund. It was also included in the State Program 863. Hisense launched its first TV with LED backlight at SINOCES 2007.

In September 2008, Hisense started mass-producing LED backlight LCD modules. It also unveiled its 42in LCD TV with LED backlight to the domestic market. The new product, model TLM42T08GP, is equipped with the core technologies for adaptive dynamic backlight control, improved image quality and LED backlight unit.

Through adaptive dynamic control technology, the model can reduce the power consumption by 30 percent, to 50W at the lowest. The model has a lifespan of 100,000hrs, equivalent to 20 years with a daily usage of 10hrs. For the LED backlight unit, Hisense produced the LCD module using nonlead, mercury-free raw materials. The module underwent paint-free, recycle processes that meet global environmental directives such as RoHS.

For the image quality, the LED backlight supports a color gamut from 105 to 100 percent NTSC or above, much better than the normal CCFL backlight of about 70 percent NTSC. The model also features a slim profile at 55mm thick, 40,000:1 dynamic contrast ratio, 1920x1080-pixel resolution, 4ms response time, 800cd/m² brightness and 178° viewing angle.

Aside from Hisense, foreign consumer electronic giants such as Samsung and Sony, and Taiwan’s LCD panel manufacturers such as Chimer, have launched LCD screens or TVs with LED backlight. With these companies’ efforts, the LED backlight module industry is expected to grow in the future.

China makers offer LCD TVs in a wide range of screen sizes. The majority of available LCD TVs are 20in to 40in models. Export models usually come with 26in, 32in, 37in and 42in displays.

Suppliers are launching more new models with screen sizes of 40in or larger. Although the mainstream screen size is expected to eventually become larger, 32in LCD TVs still account for the majority of China makers’ output.

High-definition (HD) LCD TVs will continue to dominate the product line in China. Some makers equip their products with higher than 720i resolution. Units with screens measuring 32in and larger typically deliver 1080i resolution. In general, 26in and 32in LCD TVs from China are HD-ready models; units with screen sizes of 37in, 42in and above are full-HD models.

HDMI connection is now a standard feature in LCD TVs. Most HD LCD TVs from China are designed with two or three HDMI ports. Models also come with a USB port and card reader.

Prices of LCD TVs depend primarily on screen size and value-added features. A standard 42in LCD TV is quoted from $600 to $640, and a 37in model goes for $520 to $550. Prices of 32in LCD TVs range from $340 to $360 per unit.

Export quotes for 26in units are from $270 to $280. Models with a screen size of 20in are priced from $190 to $200 each. A DVB-T module raises the unit price by about $10, while a built-in DVD player adds another $25, including IPR fees.

Makers project that prices of LCD TVs will continue to decline in the coming months in step with persistent drops in the cost of LCD panels. LCD panels and controller ICs account for the bulk of LCD TV production cost. China makers usually source these components from foreign suppliers.

Most China manufacturers source LCD panels from Taiwan suppliers such as CMO and AUO. They also purchase large panels from South Korea suppliers such as Samsung and LG Display.

Taiwan is also the major provider of controller ICs for China’s LCD TVs. Most medium- and small-scale China makers use ICs from MTK or MStar for lower cost.

Hong Kong’s LCD TV industry has been experiencing significant growth for the past two years, with the supplier base expanding to more than 20 active companies. Spurring the market expansion is the strategy of makers to establish niche market bases to avoid overcompetition. Some companies concentrate on the Asia-Pacific as an entire region, while others focus on specific countries or regions.

Data from Hong Kong Customs place the region’s LCD TV shipments in 2008 at about 4.6 million units, more than 17 percent higher than the previous year. However, the total shipment value of $449 million is only 6 percent higher year-on-year due to lower unit prices.

Most makers in Hong Kong adopt ODM- and OEM-driven business models, although almost 50 percent of suppliers also pursue own-brand manufacturing. Concurrent with exploring the overseas markets, some LCD TV suppliers in Hong Kong also sell to the local market using their own brands. These include South China House of Technology Consultants Ltd and Ringford Products Ltd. Other suppliers who promote their own brands overseas include M. Bux Electronics Ltd, Doma International and Coby Mfg Co. Ltd. The KPI Group distributes Konka and Hyundai LCD TVs in addition to OEM brands.

The majority of Hong Kong’s LCD TV suppliers cater to the small and medium-sized TV segments, with 19in to 32in screen sizes taking up the bulk of their shipments. Most models support up to 720p and 1080i resolutions and have component video and HDMI connections. Only about one out of three suppliers venture into the production of 37in and larger models, where 1080p full-HD resolution is more common.

Hong Kong suppliers are releasing fewer multifunction models. The most common add-on feature offered in most makers’ LCD TVs is a digital TV tuner. Coby offers a side-loading DVD player, in addition to dual ATSC/NTSC tuners. Samwin Hong Kong Ltd’s LCD TVs feature an optional DVD player and DVB-T tuner. Starlight Marketing (HK) Ltd has a selection of LCD TVs with built-in DVD player. It focuses on OEM projects such as Disney-themed models.

Ringford provides built-in DMB-TH and DVB-T tuners, as well as USB port. AHK Industries Ltd provides optional USB port and DVB-T tuner. Hong Kong Chusei Digital Technology Co. Ltd offers to integrate an ISDB-T tuner into its LCD TVs. Asano’s value-added options include DVB-T/ATSC tuner and memory card reader. M. Bux includes a USB port and memory card slot in some of its large-screen models.