Due to low demand for televisions, Samsung has temporarily stopped buying LCD TV panels, reports The Elec from South Korea. The display manufacturers had already been informed by Samsung in mid-June. Now it's time to reduce high inventories.
Shopping stop until the end of July (or longer)
Samsung sent the message about the purchase stop to manufacturers such as AUO, BOE, CSOT, Innolux and HKC. Panel purchases are expected to be paused at least until the end of July; if Samsung has not been able to significantly reduce its inventories by then, it could also take longer.
Samsung lowers sales forecast drastically
Samsung recently reduced its annual target of 45 million TVs shipped to 40 million in 2022. That would be 20 percent less than in the previous year, when Samsung shipped around 50 million televisions. Analysts had adjusted their forecasts of how many LCD panels Samsung will buy for its televisions this year accordingly: Instead of around 53 to 54 million, it should only be 44 million.
Full warehouses as a buffer in difficult times
Compared to 2020, which was characterized by logistics problems such as a lack of freight containers, Samsung had drastically increased its TV shipments in 2021 to provide buffers in regional warehouses. These buffers should now last for 16 weeks at Samsung; before the pandemic it was only 7 to 9 weeks, according to the report.
Other TV manufacturers are also buying fewer panels
Due to the low demand for TVs in European and North American retailers, other TV manufacturers such as LG, TCL and Sony are said to have lowered their annual delivery target and LCD purchases. This has a major impact on LCD display manufacturers: According to analysts from Omdia, the average utilization rate of display factories at the beginning of June was only 77 percent. This corresponds to a decline of 4.5 percent compared to the previous month and is now the lowest rate in the past five years.
Some companies such as LG Display are threatened by parallel falling unit prices loss.