Terry Gou Leads Sharp to Boost TV Panel Shipment in 2017 without Supplying to Samsung

16 Dec
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According to South Korea media, Sharp was rumored to inform Samsung that starting from 2017, Samsung will not receive Sharp panel supply any more. Samsung suddenly faced the supply shortage of four million units per year, so Samsung urgently ordered from another Korean panel giant LG Display. TechNews’ source pointed out, after Sharp received Foxconn group’s investment, Sharp will make an all-out effort to boost TV panel shipment starting from 2017. Sharp’s panel capacity is not enough to satisfy all the demand from its customers. Thus, Sharp has to raise panel prices, and Samsung prefers not to procure panels from Sharp anymore.

The source explained, beginning from 2017, Sharp, under the leadership of Foxconn, will transform its TV strategy significantly.

Firstly, Foxconn Group’s own TV brand, InFocus, will stop production. The entire group’s full strength will be re-directed to boost Sharp TV’s quantity and market presence. Foxconn set a 2017 annual Sharp TV set shipment goal of 20 million units. However, considering 2016’s Sharp TV set shipment only amounted to 4 million units, in order to achieve Foxconn’s 2017 target, two crucial issues will be panel supply and market outlet.

For the issue of panel supply, Foxconn planned to supply panels by Sharp and Innolux. As for LCM’s supply, Foxconn’s display module house in Nanjing will facilitate LCM integration and set assembly processes. Innolux will jointly help this process, in order to meet the panel supply target.

Because Sharp predicts that in 2017, TV panel demand will soar, Sharp currently keeps finished products of panel to its own warehouse. This move sends out a shock wave to Samsung who used to procure nearly half of Sharp panel capacity.

Therefore, after Sharp and Samsung’s negotiation finalized, Sharp decided to raise panel price in a huge scale in first quarter of 2017. Samsung preferred not to procure from Sharp any more, and shifted its orders to LG Display. This move made first quarter of 2017’s TV panel supply more intensified.

Another key issue to accomplish Sharp’s boosted target in TV market is the TV brands’ licensing. In the past, when Sharp’s sales remained sluggish, Sharp sold its TV brand licensing in the European market to Slovakia TV manufacturer Universal Media Corporation (UMC) Group. Sharp’s North America market TV brand licensing was sold to Chinese manufacturer Hisense. Therefore, Sharp only has the Japan and Asia-pacific markets to sustain its TV sales.

After participating in Sharp’s management, Foxconn strove to aggressively change the status quo. Foxconn finished negotiation with UMC in September 2016, so that Sharp brand’s licensing contract will return to the grip of Foxconn. Meanwhile, Sharp’s European outsourcing manufacturing will still go to UMC, and Foxconn will invest in UMC. This move suggests that the Sharp TV brand in the Europe market will be controlled by Foxconn, and strategically beneficial to Sharp’s development in the Europe market.

However, Chinese Hisense bought Sharp’s North America TV brand licensing and is unwilling to sell the brand licensing back to Sharp after negotiating. This factor might be crucial to whether Sharp might achieve 20 million units of TV set sales in 2017 or not.

According to an analyst, Sharp planned to ship out 20 million TV sets in 2017. This figure nearly matches the China market’s top 3 TV brands’ combined shipment, and translates to 10% share of worldwide TV market. It will be difficult to achieve.

Thus, second half of 2017 might experience a market-wide TV set price collapse for reason below. During first half of 2017, TV panel shortage might hint unmatched sales target for Sharp. In second half of 2017, Sharp might boost its TV panel shipment for the sake of hitting annual target. This factor is likely to trigger free fall of market TV panel price and deserves careful observation.

From other panel makers’ point of view, intensified panel supply meant that other panel makers might receive transferred orders. For example, AUO might benefit from Samsung’s re-directed orders.

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