TV Makers Brace For Tough 2012 Due To Flat Panel Oversupply From China

Jonathan Sutton

TV manufacturers are bracing themselves for debilitating price war by the end of 2012, sparked by an oversupply of flat-screen televisions on the global market as a result of several Chinese production plants becoming fully operational at that time. Drawing comparisons with certain apocalyptic prophecies related to the end of the Mayan calender, concerned officials in the HDTV industry have even labelled it “the 2012 problem”.

From this year onwards, a number of factories in China will start operating at full tilt to churn out flat-screen panels (which will then be fitted on television sets sold by various brands), leading to a sixfold increase in production capacity by 2012 from the levels seen in 2009. Next year, the output from China is expected to match that from Japan, effectively flooding the market with an excess supply of TVs which may depress prices even further.

Japanese TV makers will likely be hit hardest. Having posted a loss of 26 billion yen (around £197 million) between April and December last year, Sony’s televisions business looks nailed-on to register its seventh straight year of loss when the company reveals its accounts for the 2010 financial year ending March this year. Osaka-headquartered Panasonic isn’t doing much better either: the corporation’s TV-manufacturing division is expected to suffer its third consecutive year of loss for the current business year. The persistent strength of the Japanese yen currency – which dilutes revenues earned from foreign markets – certainly has not helped matters.

Television manufacturers from Japan are also struggling to make inroads in China, which has recently supplanted North America as the world’s biggest market for flat-screen TV displays with 39 million units sold in 2010. Aided by sales and customer service networks that grant access to the inland areas which are otherwise difficult for foreign companies to penetrate, Chinese TV makers have together captured an astounding 78% of the country’s flat-panel television market in the final quarter of 2010. By contrast, Sharp – the leading Japanese TV brand – only took 5.1% of the market share.