China Holiday TV Sales
On 6/08/21 we noted that expectations for the Chinese 6/18 shopping holiday were diminished as TV panel and set prices continue to rise globally, making usual holiday discounts less available as TV brands struggled to keep margins from declining. We also noted that what we believe was a false sense of optimism among TV set producers in China had built inventory levels into the 6/18 holiday, increasing the risk of a slowdown if that inventory was not sold through. According to early data comparing the extended period leading up to and including the holiday, on-line unit volumes declined as noted below, while on-line sales value increased by 25.7% y/y. Off-line units also declined by 26.9% y/y and off-line sales value declined by 5.2%.
While we would typically view an increase in sales value as a positive, especially when viewed with the ASP increases seen above, however when unit volume data is added, the conclusion becomes less positive. While the value of holiday sales grew 12.2% y/y and ASP’s grew 43.2%, unit volumes fell by 21.5%. Given the optimistic view that Chinese TV brands held going into the holiday, this would imply that not all inventory was sold and the typical inventory refresh following large shopping holidays could be less than expected or eliminated.
While much of global demand will still rely on the US TV market, given its strength over the last few quarters, we have seen weakness in the US TV market recently (see our note 6/22/21) as COVID-19 restrictions are lifted and US government subsidies are ended. While the effects of weaker TV demand globally will take some time to filter through the supply chain, we expect panel producers will continue to shift production away from TV and toward monitors and notebooks. That said, we would expect to see TV panel price increases diminish as we noted in our note last Friday (6/25/21), with only driver or other component shortages pushing brands to hold excess inventory.
While it is still early to predict the environment during the 2021 holiday season, given the number of variables facing the CE space currently, just the data above seems to be pointing toward price elasticity being the biggest determinant for the holidays., where a 43.2% increase in ASP led to a 21.5% drop in unit volume, and while that ASP rise led to a 12.2% increase in sales value, keeping TV brands at least somewhat satisfied, the unit volume weakness will have a more profound effect on the TV supply chain, and could help to alleviate some of the component shortages that have helped to push prices up.
The TV space does not operate in a vacuum, so as noted above, panel producers will continue to shift production to those products with the highest return, which tends to be smaller display products, meaning monitors and notebooks. The gaming monitor space is growing and there are still country-wide programs that require notebooks or Chromebooks, but any disturbance in demand for those products would begin to show as lower panel production utilization, which is typically not the case during the holiday build period. Perhaps the industry can scrape by this season but our Magic 8 Ball is moving
While much of global demand will still rely on the US TV market, given its strength over the last few quarters, we have seen weakness in the US TV market recently (see our note 6/22/21) as COVID-19 restrictions are lifted and US government subsidies are ended. While the effects of weaker TV demand globally will take some time to filter through the supply chain, we expect panel producers will continue to shift production away from TV and toward monitors and notebooks. That said, we would expect to see TV panel price increases diminish as we noted in our note last Friday (6/25/21), with only driver or other component shortages pushing brands to hold excess inventory.
While it is still early to predict the environment during the 2021 holiday season, given the number of variables facing the CE space currently, just the data above seems to be pointing toward price elasticity being the biggest determinant for the holidays., where a 43.2% increase in ASP led to a 21.5% drop in unit volume, and while that ASP rise led to a 12.2% increase in sales value, keeping TV brands at least somewhat satisfied, the unit volume weakness will have a more profound effect on the TV supply chain, and could help to alleviate some of the component shortages that have helped to push prices up.
The TV space does not operate in a vacuum, so as noted above, panel producers will continue to shift production to those products with the highest return, which tends to be smaller display products, meaning monitors and notebooks. The gaming monitor space is growing and there are still country-wide programs that require notebooks or Chromebooks, but any disturbance in demand for those products would begin to show as lower panel production utilization, which is typically not the case during the holiday build period. Perhaps the industry can scrape by this season but our Magic 8 Ball is moving
From This:
To this:
RSS Feed