China Becomes the World Leader in LCD-TV Production Tweet

Boom in domestic demand drives surge in production.

Much like the Cathode Ray Tube-Television (CRT-TV) market, China has become the world’s leading production center for Liquid Crystal Display-Televisions (LCD-TVs), according to iSuppli Corp.

Thanks to the government’s active stimulus program, consumer interest and declining prices, the number of LCD-TVs sold in China is set to reach 49.1 million units by 2013, up from 29.4 million units in 2009.

In the same time, the LCD-TV production among domestic Chinese OEMs, i.e. designed by Chinese companies, reached 40.3 million units in 2009, a 109 percent increase from 2008. This number will increase to 47 million units in 2014.

Disappearing Companies
China’s LCD-TV industry changed significantly during the course of 2009 as more and more small companies disappeared or began buying boards to assemble directly. iSuppli forecasts this transformation will continue during the next four years as more companies either become obsolete or change their product focus.

China’s Tier 2 and Tier 3 LCD-TV makers in 2009 failed both in terms of production and profits because of the decreased output in the market and as a result of the leading companies receiving more government support. The LCD-TV industry adopted a more centralized structure, forcing many small LCD-TV makers to quit the market, and those that survived will more than likely exit in the next three years.

The Semi-Knock Down (SKD) or Complete Knock Down (CKD) service providers have declined rapidly, and board providers as well as their customers should switch output to the domestic market and focus on the 32-inch and smaller market. Some professional markets, such as the digital signage segment may offer a way for these companies to compete with leading companies in the domestic market. As China’s LCD-TV market becomes more focused, it will be important for global companies to build up long-term partnerships with leading Chinese LCD-TV makers.

DTMB to Ramp Up in 2010
The digital terrestrial television standard in China, Digital Terrestrial Multimedia Broadcast (DTMB), failed to achieve many shipments 2009, similar to 2008. However, shipments of DTMB-compatible sets should rise to 9.8 million units by 2014, up from 4.0 million units in 2010.

To succeed, the national standard needs several factors in its favor. These factors include the right business model, government support, impetus from leading companies, ability to solve the real demands of consumers and a mature ecosystem. As such, it is currently impossible for small fabless companies to be successful.

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