The purchasing strategy of LCD TV panel will change in 2020. Although the options are limited, it is recommended that TV manufacturers choose more Chinese panel manufacturers. Samsung hopes to further strengthen its bargaining power with its nine panel suppliers through panel distribution in 2020.

Internal support of supply chain is very important, but if supply chain nodes are weakened, it may bring pressure to participants.

LCD TV panel purchasing relationship will change in 2020. Although the choice is limited, it is recommended that TV manufacturers choose more Chinese panel manufacturers.

When the business relationship or market becomes dominated by a few powerful enterprises, TV manufacturers and panel manufacturers may face various dilemmas and risks if they stay in the competition for bargaining power.

As analyzed by IHS Markit | technology in TV displays and OEM information services, the following chart reveals some stable business relationships, but many changes have taken place in recent years, and more changes are expected by the end of 2019 and 2020.

Changes in the panel supply base are particularly dramatic, as follows:

Korean panel manufacturers will restructure and close their factories. TV manufacturers urgently need to find reliable and competitive alternative suppliers to ensure that they can meet their increased shipment targets by 2020.

The increased supply capacity of Chinese panel manufacturers such as HKC display, CEC panda LCD technology and CHOT will ensure new business growth for global TV brands such as Samsung and LG Electronics, as well as several Chinese TV brands.

Sharp's pressure to rebuild or grow its business with outside TV manufacturers continues. This is because Foxconn / sharp is unable to meet the needs of its exclusive customers.

If the trade war between China and the United States escalates, the product mix and competition pattern of TV brands will change dramatically.

By 2020, the LCD TV panel supply of Korean panel manufacturers will be greatly reduced. As a result, top TV makers like Samsung, LG Electronics and Sony must be prepared to look for backup suppliers in advance. IHS Markit | technology expects to rely more on Chinese panel manufacturers due to the limited range of options available.

Although Samsung display and LG display, the largest panel suppliers of Samsung and LG electronic, still have the largest panel supply in 2020, the specific quantity is expected to be much smaller than in the past few years. Therefore, it is increasingly important to increase cooperation with other competitive and reliable panel companies, because since 2020, the focus of their largest panel suppliers is not the supply of LCD TV panels. Although the supply of panels still exceeds the demand, first-line TV brands are selectively entering into long-term supply agreements (LTAS) with their largest suppliers and external panel suppliers to ensure that their supply business is placed at the highest priority in 2020.

Samsung, the world's largest TV maker, hopes to further strengthen its bargaining power with nine specific panel suppliers through panel distribution in 2020. In 2020, csot will replace BOE technology to become the largest external panel supplier of Samsung. In addition to Samsung display, Samsung Electronics has also signed a 2020 LTA with external panel suppliers such as China Star and Youda.

The competition between BOE technology and csot is intensifying, especially in the supply of LCD TV panel produced in the 10.5 generation. As Samsung prefers VA mode panel, it clearly intends to increase its share of panel procurement in csot in 2020. IHS Markit | technology predicts that csot will replace BOE technology as Samsung's largest external panel supplier in 2020.

Unlike Samsung's relatively diversified and balanced supply mix, LG Electronics and Sony can only rely more on Chinese panel manufacturers such as BOE technology. However, their choice may be limited because they have no or very few business contacts with csot. At the same time, they are more inclined to work with HKC display, CEC panda or rainbow optoelectronics.

Although internal support is crucial, weakening one node in the supply chain can put pressure on all participants

The dynamic of the supply chain and the change of the competition pattern urge the first-line TV brand to reconsider this year's and future procurement plans. Whether in terms of supply or demand, internal support has become crucial. Therefore, it is very important to build a strong and integrated TV (FIT) business model. This concept means that there is strong demand from TV manufacturers to absorb increasing panel supply. In other words, supplying products to exclusive customers is considered competitive, so that exclusive panel and TV manufacturers can work together to optimize the cost efficiency of the supply chain, thereby enhancing their competitiveness and influence in the global market.

However, if a supply chain node is weakened, it may bring a burden to all participants. Most of the leading TV manufacturers have a variety of panel sources, and their goal is to obtain stronger purchasing power to enhance their competitiveness. However, if the panel supply of exclusive suppliers is excessive, they are not necessarily responsible.

The chart below shows how major TV brands purchase panels from their strategic panel suppliers. The figure below shows the panel manufacturer's share of shipments to strategic customers.

Samsung and Foxconn / sharp became more dependent on strategic panel suppliers in 2018, regardless of oversupply. However, supply chain relationships have changed and will be reshaped again in 2019. Samsung's procurement strategy will be crucial as its partnership with Samsung display is expected to tighten, but there are some conflicts between the two companies, which led to a decline in Samsung display purchases in 2019.

In 2020, Samsung will further reduce the number of panels it purchases from its strategic suppliers, given that it plans to shift its LCD TV panel capacity to QD displays.

After the completion of QD display conversion, the use of LCD TV panel of Samsung display will be limited from 2020. Its panel supply to external customers, especially Chinese TV manufacturers, will be significantly reduced.

LG display is planning to close the plant, which will greatly affect its LCD TV panel supply in 2020. By 2020, leking Electronics will significantly reduce its purchase of LG displays. IHS Markit | technology predicts that LG Electronics will have to rethink its panel purchasing strategy. It may purchase LCD TV panels from external suppliers such as BOE technology, HKC display and CEC panda to make up for the LCD TV panel supply that LG monitor may lose in 2020.

In the end, TV manufacturers that lead the market will want to maintain or strengthen their bargaining power with panel suppliers. However, the problem they will face is that the business will be dominated by a few strong supply chain participants.