By Bob O'Brien
One of my continuing projects that should be interesting to Display Supply Chain Consultants followers involves a new global report on TV Point of Sale (POS) data. Those of you who saw my presentation at the SID Business Conference last month saw some of the output of this report, but I’d like to share some conclusions and insights for DSCC.
The project involves combining the data from the two leading point-of-sale (POS) companies, NPD and GfK. For a number of reasons, mostly historical, these two companies have operated in geographic isolation: NPD provides POS data in North America (NAFTA region including Mexico) but not outside NA, and GfK provides POS data in most of the rest of the world. During my time at Corning, we subscribed to data feeds from both companies, to pull together a global view of demand. Now the companies are working to generate a unified report, and I’ve been consulting with them to pull it together.
The data from this report confirm something that I have held for some time: the TV market differs fundamentally from other consumer electronics device markets in that it is not a single global product market, but rather varies greatly from country to country. One of the ways to see this is by looking at the average TV prices from the G20 countries:
The average TV price (the blue line above) varies by more than a factor of 3 from the lowest (Indonesia) to the highest (Australia). This overall average is a function of both product- and country-specific factors: screen size mix, product features, brand mix, retail competitiveness and margins, logistics, tariffs, VAT, etc. Even when we strip out the main product mix variable and focus on the 32” screen size, there is still a factor 2 between low price countries like Canada and the US, and high price countries like India, Japan, and Korea, and more than a factor 3 to the highest price country, Argentina.
Just for ease of comparison, I take the data in the chart above and index it to the G20 average in the following chart:
I’ve relabeled the index of 32” prices as a “country factor” – an index of how individual country factors affect the TV price. Countries with a low country factor (US, Canada, China, Indonesia) tend to have:
In the product factor, the range of outcomes is less striking, but Australia stands out with a very high rating. Australians tend to buy very large TVs with a lot of high-end features. It’s worth noting that the product factor is not very strongly related to income: several high-income countries (Japan, Italy) tend to go for smaller screens and/or slower adoption of premium features, while several low- or mid- income countries (China, Korea) go for large screen sizes and lots of premium features. Among the countries with low product factors are 3 out of the 4 BRICS – Brazil, Russia and India.
The case of India is worth discussing more. India is one of the lowest-income countries in the G20, with a huge population and some of the highest TV prices in the world. Thus the TV market in India is dramatically constrained by affordability, both in terms of the number of units sold and the average screen size. The India TV market is ~18M units per year, while neighboring China with a similar population has a market 3x as big. Furthermore, the difference in average screen size is just as dramatic: in India the average TV is about 32”, while in China the average is about 45”, almost double the size in area terms.
Therefore, unlocking this opportunity for the India TV market may represent the single biggest factor for growth in area terms for the worldwide display industry. Although this might be achieved by a reduction in import barriers, that’s not likely: the current government in India has re-iterated its push to develop local manufacturing and deter importers, as seen in its battle with Apple.
So this is where we come to the recent rumors (see Ross’ blog from 6/29) that an Indian firm, Twinstar, is rumored to be purchasing the equipment from Samsung’s line 7-1 to set up an LCD manufacturing center in Maharashtra, India. The capacity of line 7-1 has been 150k substrates per month; when fully ramped this fab could produce about 19 million 32” TVs per year at 90% yield, almost exactly the size of the current TV market, and as I’ve noted this is only a small fraction of the potential India TV market.
Another important item to note about this equipment transfer: Samsung is among the leading TV brands in India. We can well imagine that the equipment deal includes a provision for future supply of TV panels from Twinstar to Samsung in India.