TrendForce points out that although Samsung eventually had to postpone the shut-down of the plant until 3Q due to financial, technological and other considerations, end distributors' inventories of TV sets have already become bloated beyond saving in June, and brands' panel inventories have already reached dangerous levels. Although some TV panel manufacturers are making small adjustments to production capacity in June and July, there is no turning back from the oversupply situation, note the analysts.
Samsung Electronics made it out of the trade war safe and sound, as it leveraged its Mexico manufacturing advantage. Yet despite its signaling at the end of 2Q that it will actively make preparations in anticipation of peak season demand in 3Q, China brands' efforts to promote sales in 1H haven't been paying off, leading to ever-increasing inventory levels.
Adding that panel prices started to take a dive in May and continued plunging throughout June, China brands' confidence in the markets has greatly diminished, and will take up a more conservative stance in procurements for July.
Now, most panel manufacturers will be turning a blind eye towards the prospect of making production capacity adjustments in 3Q, in hopes of maintaining their respective shares of the market, meaning that as long as demand will stay weak, production capacity pressures will continue to rise.
This will give further negotiating power to buyers, driving TV panel prices further down.