OLED TV 2023
Earlier this month we noted that it has been a difficult year for WOLED TV, with negotiations between Samsung Electronics and LG Display (LPL) for the purchase of ~2m WOLED displays failing, and overall TV demand falling below expectations as the global economy faced rising inflation and rising interest rates. Our two demand scenarios yielded unit volume estimates of 7.77m units as the best case and 7.27m units as the worst case, with a ~3% over-supply in the best case and a ~17% oversupply in the worst case[1]. Since then it seems estimates for WOLED TV shipments have continued to erode with back half production being lowered at LG Display, the sole producer of WOLED panels for TV, and the lack of an agreement with Samsung, weak overall TV demand, and continuing LCD panel price declines, all contributing to lower expectations.
With our worst case estimate looking the more likely, we move our attention to 2023 for WOLED TV set shipments and look toward the possible scenarios that might develop next year. While there are certainly many variable that could come into play during 2023 that would affect OLED TV shipments, we focus on two. Fist, whether Samsung and LG Display can come to terms as to a deal for what would likely be ~2m WOLED units, and the price of LCD TV panels. To some degree they are dependent on each other as the relative value of LGD’s WOLED panels to Samsung would be determined by Samsung’s alternative, which would likely be LCD panels with Mini-LED/QD backlighting, already a mainstay of Samsung’s premium TV business, so if LCD TV panel prices continue to decline, we expect Samsung will opt for the less expensive solution, LCD, and LGD will face more typical OLED TV demand.
As we have mentioned previously, TV panel prices, while still declining m/m, have at least slowed their precipitous declines, and could see at least a shot at stability toward the end of this year. That said, we still believe it will be a rather difficult holiday season for the TV set market as inventories are coming into the holidays higher than demand might portend, and while some panel producers have reduced utilization rates substantially, others less so, reducing the drawn down of inventory levels. If holiday sales are enough to deplete excess TV panel inventory, it could set the tone for at least a small TV panel price recovery in late 1Q ’23 and that scenario would, in our view, give Samsung more incentive to strike a deal with LG Display as the value of relatively fixed price WOLED panels would look more attractive.
All in, we see a best case scenario of 9.25m units next year and a worst case of 8.5m units as shown below, with both Samsung’s potential decision and LCD TV panel prices as the swing factors. Samsung does have the upper hand in the negotiations, especially when it comes to negotiating prices for LCD TV panels, as they are the largest purchaser of LCD panels that has no internal large panel LCD production capabilities. While there are no other OLED TV panel producers who could supply mass production level volume, other than LG Display, Samsung seems to have chosen the LCD alternative this year and could do so again next year.
[1] 10% oversupply would be the normal baseline.
With our worst case estimate looking the more likely, we move our attention to 2023 for WOLED TV set shipments and look toward the possible scenarios that might develop next year. While there are certainly many variable that could come into play during 2023 that would affect OLED TV shipments, we focus on two. Fist, whether Samsung and LG Display can come to terms as to a deal for what would likely be ~2m WOLED units, and the price of LCD TV panels. To some degree they are dependent on each other as the relative value of LGD’s WOLED panels to Samsung would be determined by Samsung’s alternative, which would likely be LCD panels with Mini-LED/QD backlighting, already a mainstay of Samsung’s premium TV business, so if LCD TV panel prices continue to decline, we expect Samsung will opt for the less expensive solution, LCD, and LGD will face more typical OLED TV demand.
As we have mentioned previously, TV panel prices, while still declining m/m, have at least slowed their precipitous declines, and could see at least a shot at stability toward the end of this year. That said, we still believe it will be a rather difficult holiday season for the TV set market as inventories are coming into the holidays higher than demand might portend, and while some panel producers have reduced utilization rates substantially, others less so, reducing the drawn down of inventory levels. If holiday sales are enough to deplete excess TV panel inventory, it could set the tone for at least a small TV panel price recovery in late 1Q ’23 and that scenario would, in our view, give Samsung more incentive to strike a deal with LG Display as the value of relatively fixed price WOLED panels would look more attractive.
All in, we see a best case scenario of 9.25m units next year and a worst case of 8.5m units as shown below, with both Samsung’s potential decision and LCD TV panel prices as the swing factors. Samsung does have the upper hand in the negotiations, especially when it comes to negotiating prices for LCD TV panels, as they are the largest purchaser of LCD panels that has no internal large panel LCD production capabilities. While there are no other OLED TV panel producers who could supply mass production level volume, other than LG Display, Samsung seems to have chosen the LCD alternative this year and could do so again next year.
[1] 10% oversupply would be the normal baseline.
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