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Last year's peak season is not prosperous this year, the panel is still afraid of overcapacity
In the past year, panel manufacturers have experienced a challenging period marked by low demand during peak seasons and weak performance in off-peak times. Retail sales have struggled to gain momentum, while China's growing production capacity continues to create an imbalance between supply and demand. This has led to ongoing price declines and underwhelming overall sales figures. Looking ahead, WitsView forecasts that global LCD TV shipments will reach 222 million units in 2016, representing a 3.3% annual growth.
AUO, one of the leading panel manufacturers (stock code: 2409), expects the global demand for panel area to grow between 4% and 6% this year, while supply is projected to increase by 5% to 7%. Despite this, the industry still faces the risk of overcapacity, with LCD TV shipments likely to remain flat.
According to WitsView’s report, global LCD TV shipments totaled 215 million units in 2015, marking a slight decline of 0.6% compared to the previous year. This follows two years of growth, including 2013 when the market saw positive expansion.
Lin Shushun, a research manager at WitsView, described 2016 as a mixed year for the industry. The U.S. Federal Reserve's decision to raise interest rates is expected to impact weaker currencies, which could reduce consumer purchasing power and become a major concern for TV shipments. However, the recent drop in panel prices may help improve profit margins. For instance, brand manufacturers are likely to adjust their retail prices accordingly, potentially triggering a new buying wave during the peak season. Larger TVs are becoming more affordable, driving both small and large size upgrade demands. WitsView again estimates that 2016 LCD TV shipments will reach 222 million units, up 3.3% from the previous year.
Faced with industry challenges, AUO is focusing on building competitive barriers. Rather than following the same path as competitors, the company aims to differentiate itself by raising the difficulty for others to imitate. This strategy is designed to achieve true market differentiation and surpass peers, ultimately leading to better profitability. In addition, due to the high level of homogeneity in standard bulk products, irrational price competition has been a problem. To address this, AUO plans to introduce cost-effective products tailored for different market segments, using diversification and customization as key strategies to win in the market.