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More than 80% of the new generation flat panel monitors being sold are not made by the manufacturer whose name appears on them according to research group Display Search.
The Company said that OEM outsourcing of LCD monitors rose to 80% of the total supply while LCD TV OEM outsourcing increased to 23%. In 2008, both are expected to increase further as LCD monitor makers, and especially TV brands, continue to outsource and to pressure supply chain participants to reduce costs. Among those brands moving an outsorce OEM model are Sony, Philips, Pioneer and Toshiba.
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LCD TV outsourcing is expected to grow to at least 35%. The results and their implications in addition to other insights were revealed in DisplaySearch’s Global LCD TV Supply Chain Analysis & OEM/ODM Opportunities Topical Report.
“As the demand for flat panel TVs continues to increase, the pressure on supply chain participants becomes intense, resulting in rapidly eroding TV maker profit margins. Based on these market dynamics, the concern of TV supply chain participants is whether they will benefit from the growth of both the LCD TV market and outsourcing,” noted Deborah Yang, Director of Monitor and TV Research.
DisplaySearch also say that LCD TVs become a commodity, TV brands are increasingly pressuring the supply chain to minimize costs.
LCD TV brands are increasing OEM orders to professional system integrators in Taiwan. “In-sourcing” will remain a priority for some leading TV brands in order to strengthen vertical integration and achieve TV capacity targets.
To fight commoditization in LCD TVs, regional manufacturing is a must to streamline the LCD TV supply chain. Cost savings are achieved by Semi Knock Down (SKD) manufacturing in Europe for all sizes, even with a potential 5% duty on imported panels. The savings, however, are only achievable through optimal factory utilization, smart SKD design guidelines, and best-in-class supply chain management and execution.
Many IT OEM makers are doing Flat Panel TV manufacturing; the bigger will get stronger and more competitive in scale, cost and bargaining power in the supply chain.
