Samsung has temporarily suspended the purchase of liquid crystal display (LCD) panels due to low demand for TVs, TheElec has learned.
It had sent such a notice in mid-June and those affected by the halt include display panel makers BOE, CSOT, HKC, AUO and Innolux, sources said.
The move is expected to last until the end of July but unless Samsung’s TV inventory doesn’t drop dramatically, the halt may last longer, they said.
Samsung’s TV business, in its latest strategy meeting for the second half of the year, reduced its annual TV shipment target to 40 million units from the original 45 million units.
Multiple analyst firms Omdia and Display Supply Chain Consultants modified their estimation of how many LCD panels Samsung will procure this year.
Early in the year, they expected the South Korean tech giant to procure 53 million units to 54 million units but dropped their estimate by 10 million units to 44 million units.
Samsung had shipped 50 million units of TVs last year, an over 10% increase from 2020.
The South Korean tech giant had aggressively increased shipment following the global logistics issue and lack of available containers during 2020 due to the pandemic.
Its plan then was to ship many units as possible as buffers in case the logistics problem gets worst so that it can have TVs to sell at locations.
But demand for TV had dipped during the first half of this year and retail sales decreased in North America and Europe.
Samsung’s current inventory amounted to 16 weeks' worth, which is worst than the 7 to 9 weeks' worth it had before the pandemic, the sources said.
Other TV vendors besides Samsung such as LG Electronics, TCL and Sony were all lowering their annual shipment target for this year as well, they said. They were also reducing the number of LCD panels they purchase, they added.
According to analyst firm Omdia, the average factory operation rate of display panel companies in early June was 77%, a drop of 4.5% from the month before and the lowest rate in the past five years.
Display panel companies are expected to see low profitability due to unit price drops. LG Display is expected to post a loss for the second quarter.