Abstract

MIC Perspective

LCD TV Market Reaches Plateau in 2011, Market Share Changes Slow Down

Affected by the lackluster economic performance and debt crisis in the US and European markets, worldwide LCD TV sales performance in the second half of 2011 was lower than market expectation. Observing LCD TV penetration in overall TV products, analog to digital TV switchover, and CRT TV replacement demand, it can be seen that LCD market development slowed down starting from 2011.

Looking at regional market development, thanks to its enormous population, CRT replacement, and analog to digital TV switchover slated for 2015, it is anticipated that in the future, the Chinese market will continue to be the largest single LCD TV market worldwide starting from 2011. Other emerging markets, for example, Latin America and Asia Pacific region, will also become the spotlight for branded vendors largely due to the abovementioned similar factors. As regards mature markets such as US, Japan, and Europe, these markets are expected to rely on emerging technology such as OLED (Organic LED) to trigger a new wave of TV demand.

As regards market shares among branded vendors, unless market or technology breakthrough can be achieved, it is projected that LCD TV market will continue be dominated by Samsung and LGD of Korea. Japanese brands will take the third place and be followed by the growing Chinese brands. The remaining market share will be divided by other channel distributors and regional brands which focus mainly on certain markets. Diminishing product differentiation is anticipated to spur several rounds of price competition in the market, and branded vendors will face profit and economies of scale problems as a result.

Product Development to Reach Maturity, 2012 Trends Still Focus on Industrial Design, 3D, Smart Applications

Looking at industrial design development, LCD TVs with 32-inch size screen and above were still the market mainstream in 2011. Vendors plans to stimulate TV demand by launching price strategies, so average screen size is expected to increase to 40-inch and above. Vendors are projected to leverage production capacities of their next generation production lines and economic cuts to produce extra-large products or products with special sizes such as 39-inch and 43-inch.

In addition to panel size development, narrow border design is expected to become the center of attain from 2012 to 2013. Even though LED backlight TVs feature environmental friendliness and sharp color performance, consumers usually put emphasis on the ultra-thin industrial design of such TVs. Therefore, LED backlight TV vendors continue to promote industrial design of the products. LED backlight supply is projected to be stable in 2012, it is thus expected that branded vendors will further enhance LED backlight TV promotion and expand product portfolio to entry-level products.

The 3D craze starts to slow down in 2012; nevertheless, prices of 3D glasses and 3D TVs began to drop and consumers prefer one-stop shopping, branded vendors thus gradually promote 3D TV products. Currently, the 3D features are only available through bundled sales with mid-range and high-end TVs, consumers do not view 3D as necessary as a result. Even though there is still room for improvement on 3D content, display technology, and standards in the future, 3D is still vital in the development of TV products.

The development of connected TVs will continue to focus on Smart TVs in 2012. Smart TVs feature application stores, applications including online video content search, integration and content sharing with tablets and Smartphones, and social network integration. Nevertheless, Smart TVs still face problems such as complicated and inconvenient HMI design.

Looking at Smart TVs released and demonstrated by branded vendors, it can be seen that keyboards, voice control, gesture, body movement, and even eye contact have been integrated into Smart TVs. Consumers' responses to all these features, which are different from the convenient control features created by remote controls, are projected to be critical. With smart HMI, consumers will have a variety of platforms to choose from, such as Google TV or other customized Android-based platforms. However, excessive choices are projected to negatively affect consumers' purchase decision and product development. Just as Smartphone platform development, through market competition among different platforms, applications, and stores, the market will eventually be dominated by several major smart TV platforms in the future. The platforms are anticipated to closely integrate with HMI based on user requirements and habits, and the connected TV market will advance toward Smart TV development.

Taiwanese LCD TV Industry to Strengthen Software Capabilities Aiming to Land High-end Product Orders

As high specifications, high-end technologies, and cost reduction became vital, branded vendors began to outsource LCD TV manufacturing. Through leveraging their experiences in monitor contract manufacturing and abilities to obtain key component supply, Taiwanese contract makers successfully win over orders from branded vendors. It is projected that branded vendors will continue to outsource TV production, and Taiwanese LCD TV contract makers will thus see order increases in 2012.

Japanese brands will continue to be Taiwanese makers' major customers in 2012; while the importance of channel distributor and regional branded vendor customers is one the rise. Most of the Korean and Chinese branded vendors will still produce LCD TVs on their own, and Taiwanese makers are projected to land only urgent orders. Unless Taiwanese makers are able to deliver further technology or cost advantages, the makers are less likely to see customer portfolio changes.

Looking ahead in 2012, it is projected that the Taiwanese LCD TV industry will continue to adopt the BMS and MS cooperative business models and team up with upstream panel makers to reduce module purchase costs. Furthermore, as panel supply is sufficient at present, it is anticipated that the industry will try to launch product development with branded customers.

As the industry's design and manufacturing technologies advance, Taiwanese makers are capable of producing products with complicated specifications, such as 3D and Smart TVs and products adopting European standards. Nevertheless, hardware design and manufacturing are still the core technologies of Taiwanese makers. In the past, Taiwanese TV makers relied heavily on chip supports. Nowadays, with the emergence of 3D and network connection applications, software support capabilities of TV are required in order to download and install applications and accept audio and video resources. Related hardware and software integration will not be limited only to image adjustment and easy HMI.

How to work with branded vendors on product development changes, land orders to contract manufacture products other than entry-level models, and create more profit are projected to be the main concerns for contract makers. For example, in connected TV product development, graphics acceleration, applications, system safety, and content copyright software supports are processed differently based on individual customer demand. Supporting customers' software development is thus vital for system integrators in order to see further advances. In the future, platform and application optimization related professionals will pose considerable impacts on the development of vendors.

Appendix

Glossary of Terms

List of Companies