Since the beginning of this year, the TV industry has been struggling with shrinking markets and rising production costs, but the display panel sector has shown a completely different picture. While traditional TV brands are facing losses, upstream panel manufacturers are experiencing significant growth.
According to recent data from the statistical agency, BOE reported a total revenue of 44.6 billion yuan in the first half of the year, representing a 68.65% increase compared to the previous year. The net profit for shareholders also rose sharply to 4.3 billion yuan, marking a major turnaround from previous years. After adjusting for non-recurring gains and losses, BOE's net profit reached 4.018 billion yuan during the same period.
Another major player in China’s panel industry, Tianma, also released its performance report at the end of August. The company saw a 24.83% year-on-year increase in total revenue, reaching 6.204 billion yuan. Its net profit attributable to shareholders jumped by 69.15% to 448 million yuan, and after excluding one-time gains and losses, the net profit stood at 241 million yuan.
From this perspective, it's clear that traditional TV manufacturing is not as profitable as before, while internet TV brands are also struggling financially. However, upstream panel makers are now reaping the benefits, creating a new dynamic in the TV industry chain.
The challenges faced by TV companies vary depending on their position in the supply chain. While the rise of internet-based TV products has driven technological innovation, it has also put immense pressure on manufacturers due to rising production costs and market saturation.
Since April 2016, LCD panel prices have been on a steady upward trend, marking the longest price increase in over a decade. By mid-2017, panel costs had risen by approximately 40% compared to the same period last year, directly impacting the net profits of most TV companies.
Although the increase in production costs can be seen as a factor pushing industry profits upward, the shrinking consumer TV market has become a key external challenge for TV manufacturers, making it difficult to reverse their declining trends.
According to the "2017 China TV Market Semi-Annual Summary Report," domestic color TV retail sales dropped by 7.3% to 21.81 million units in the first half of the year. Meanwhile, the online TV market, which was once favored by internet-based brands, also showed signs of slowing down, with online color TV sales falling by 1 percentage point to 7.68 million units, or 35% of the market.
Faced with these tough conditions, many TV executives have pointed out that rising raw material and labor costs are putting manufacturers' profitability under severe pressure. This situation has forced the entire television industry to accelerate transformation and seek new ways to revitalize the market.
The profitability of upstream panel manufacturers is not only an opportunity for industry development but also a chance for the TV sector to rebound. For example, BOE invested 3.17 billion yuan in R&D in the first half of 2017, filing more than 4,000 new patents. The company also made significant progress in OLED and AI technologies, with patent applications increasing by 22% year-on-year, bringing the total number of available patents to over 55,000.
It is expected that the overall boost from panel manufacturers will help unlock the potential of the TV supply chain and speed up the transformation of the entire industry. For instance, OLED technology is expected to see a breakthrough this year, with more global and domestic TV brands starting to expand their OLED product lines.
Meanwhile, AI and voice recognition are opening up new usage scenarios for TVs, helping them move into higher-end markets. In an environment where both hardware and software are being upgraded, this could give domestic TV companies a better chance to compete globally.
However, if downstream companies fail to seize the opportunities brought by upstream technological advancements, it will become a major test for leading TV brands. Currently, some brands still rely heavily on LCD technology, using "logo selling" strategies even at a loss, which is not a sustainable path for long-term development.
There is reason to believe that as the TV industry continues to transform, another round of brand reshuffling is inevitable. As the most competitive brands explore new growth areas, the turning point for the TV industry may be just around the corner.
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