Fun With Data – Small in Indi
Much has been said about the ever increasing size of TV sets over the last few years and our recent note (9/1/21) gave some indication as to the variations in available screen size data. That said, India, as an emerging TV market, has a few characteristics that set it apart from the global data that is focused on the ‘premium’ TV market that includes both large size TVs and what are considered specialty TV products, although what is included in that designation also varies considerably by source. What does standout however is the difference between both India’s average panel sizes and set pricing and more mature TV markets. The most popular size TV in the Indian market is 32”, with a 59% share, which compares to ~20.9% in the global TV set market according to Digitimes Research, based in Taiwan. Pricing in India for 32” TVs runs from $135 to ~$272, while in the US you can grab a Toshiba (6502.JP) 32” Fire TV for the same $135, 32” TVs in the US can run as high as $529 for Samsung’s fancy ‘The Frame’, which becomes a ‘work of art’ when not in use.
Again, due to differences in size categories it is difficult to make direct comparisons as to other TV sizes in India relative to the global markets, one that we can make is the 55” to 65” TV size category. While this is not part of the ‘ultra-size’ category that goes up to 88+”, it does represent the upper end of consumer demand in India, which represents ~8% of the Indian TV market, while on a global basis that category represents ~21.3% of the market. The Indian government has a strong interest in developing the TV supply chain, and while it has done so to a degree in terms of TV set assembly, with ~65% of sets sold in India assembled locally, but most of the components, particularly TV panels, are produced outside of the country and India has yet to have been able to attract a panel producer to actually produce panels in country.
As the technology to produce TV panels does not exist in the country, the supposition is that India will need a ‘technology transfer’ from an existing panel producer to initiate a panel production fab on its own. Normally this would likely entail a complex set of parameters and negotiations with a panel producer and its government, as much LCD technology would fall under the protection of government mandates to protect state technology, but as India seems to still be in the ‘small TV’ era, the sophistication level of that technology have been suggested to be less of an issue than might be the case for 65+” panel production.
In reality, we expect despite the demand for smaller TV panel sizes, it would be unusual for a new fab to be built that would be less than Gen 8, which would not only be an efficient fab for the production of 32” TV panels, but would also be efficient for panel production up to 55”, and that might make negotiations for the technology a bit more complex. With the biggest producers of 32” TV panels being LG Display (LPL), BOE (200725.CH), and Chinastar (pvt), it would seem rather than negotiating to ‘lease’ the technology to build a state-owned LCD fab in India, it might serve the Indian government better to offer incentives to panel producers themselves, although this has been tried before.
What is rally missing however is the full infrastructure needed to support a panel production facility, which would include a myriad of other facilities that supply the materials necessary to localize production and keep transportation costs at a reasonable level. The Indian government is also not known for its ability to maintain a consistent level of funding or even stable policy, which has hampered negotiations in the past, but even with the tense relations that India has with China currently, one would think that some of the smaller Chinese LCD panel producers would be interested in developing such a fab with the support of the Indian government, even if it was just to produce relatively small TV panel sizes. That said we doubt even the Chinese, who have an iffy record with IP, are likely still not convinced that such a cooperative agreement could be reached and maintained without losing some important IP in the process.
Again, due to differences in size categories it is difficult to make direct comparisons as to other TV sizes in India relative to the global markets, one that we can make is the 55” to 65” TV size category. While this is not part of the ‘ultra-size’ category that goes up to 88+”, it does represent the upper end of consumer demand in India, which represents ~8% of the Indian TV market, while on a global basis that category represents ~21.3% of the market. The Indian government has a strong interest in developing the TV supply chain, and while it has done so to a degree in terms of TV set assembly, with ~65% of sets sold in India assembled locally, but most of the components, particularly TV panels, are produced outside of the country and India has yet to have been able to attract a panel producer to actually produce panels in country.
As the technology to produce TV panels does not exist in the country, the supposition is that India will need a ‘technology transfer’ from an existing panel producer to initiate a panel production fab on its own. Normally this would likely entail a complex set of parameters and negotiations with a panel producer and its government, as much LCD technology would fall under the protection of government mandates to protect state technology, but as India seems to still be in the ‘small TV’ era, the sophistication level of that technology have been suggested to be less of an issue than might be the case for 65+” panel production.
In reality, we expect despite the demand for smaller TV panel sizes, it would be unusual for a new fab to be built that would be less than Gen 8, which would not only be an efficient fab for the production of 32” TV panels, but would also be efficient for panel production up to 55”, and that might make negotiations for the technology a bit more complex. With the biggest producers of 32” TV panels being LG Display (LPL), BOE (200725.CH), and Chinastar (pvt), it would seem rather than negotiating to ‘lease’ the technology to build a state-owned LCD fab in India, it might serve the Indian government better to offer incentives to panel producers themselves, although this has been tried before.
What is rally missing however is the full infrastructure needed to support a panel production facility, which would include a myriad of other facilities that supply the materials necessary to localize production and keep transportation costs at a reasonable level. The Indian government is also not known for its ability to maintain a consistent level of funding or even stable policy, which has hampered negotiations in the past, but even with the tense relations that India has with China currently, one would think that some of the smaller Chinese LCD panel producers would be interested in developing such a fab with the support of the Indian government, even if it was just to produce relatively small TV panel sizes. That said we doubt even the Chinese, who have an iffy record with IP, are likely still not convinced that such a cooperative agreement could be reached and maintained without losing some important IP in the process.
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