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Displays Could Already Be the Supply Chain Story of 2014

Predictions for enhanced HDTV production have taken a massive leap — enough to offset the shrinking PC screen market. Are those predictions too rosy? If OEMs flub predictions about TVs covering the PC glass falloff, it could result in a crunch or an oversupply this year, with drastic effects on pricing either way.

The sudden focus on televisions hasn't come out of nowhere — sales have been rising steadily for the past several years. But the shift toward massive, high-resolution screens has become so pronounced that it now seems to defy common sense. That makes it very difficult to predict glass supply.

As the recent Consumer Electronics Show (CES) in Las Vegas showed, screen sizes for the so-called 4K or ultra-high-definition televisions have now reached 110 inches. Resolutions are so fine that the human eye can't really detect the improvement in many cases. Nevertheless, an NPD DisplaySearch report (registration required) said sales of the high-end sets are likely to increase from fewer than 2 million in 2013 to more than 12 million in 2014. That's a massive increase in demand for high-end glass, particularly with the units unveiled at the CES coming in 20-30% larger than their predecessors.

The TV arms race has implications for the entire electronic supply chain as screens consolidate their position as the focus of device design across the industry. As recently as five years ago, predicting glass supply for the TV business didn't necessarily have implications for the telephone or PC business — or even for medical devices. Now it does.

The size of the new TV screens is also an issue. A 100-plus-inch TV is a resource-intensive device with a high unit cost. To complicate matters, sales of the new sets are not nearly as predictable as phone or even tablet sales. NPD DisplaySearch's rosy predictions aside, it's unclear how large a market there is for $4,000-$20,000 TVs. Most of the current sales are in just one market, though a large one: China.

Writing from the CES, Techlicious reported that screen resolution has gotten so fine, consumers can't tell the difference between the new 4K screens and older HDTV flat screens on sets smaller than 70 inches. High-end designs on display at the CES from Samsung and LG curve slightly outward, like macaroni. Techlicious says this is in part to signal to consumers that this is new technology, not the usual flat screen your TV has used since the mid-1990s — in case you can't tell that by just looking at the image.

That might seem like a hiccup between screen technology advances and consumer needs, but the difficult sales proposition for the new TVs has implications for the broader glass supply chain. With PC sales continuing to slide, demand for high-definition television has been picking up slack from the shrinking sales of desktop monitors and even larger laptops. One key difference: Tablets and phones are still emerging technology, but HDTVs seem to have topped out their potential. This makes it much harder to convince someone to replace last year's TV than to replace last year's iPad.

That would seem to suggest that glass supply orders based on demand for ultra-high-definition TVs aren't really bets on the new resolutions and vast screens impressing consumers. It's effectively a bet on the market for the ultra-HD glass taking root outside its main market in China, particularly in the US and Europe. With both places still recovering from steep financial crises, that's a huge bet on a huge glass order for electronics that's far from crystal clear. It's just January.

11 comments on “Displays Could Already Be the Supply Chain Story of 2014

  1. FLYINGSCOT
    January 23, 2014

    The two things that always amaze me in technology advancement are TV and mass storage density.  I believe these are major drivers for many other technologies too.

  2. t.alex
    January 23, 2014

    can we say that 3D TV is dead?

  3. Hailey Lynne McKeefry
    January 24, 2014

    @FlyingScot, what amazes me is people's willingness to buy a new TV every couple of years. I may be wired wrong but i can't imagie that the picture is THAT much better. Course, that's a marketing conversation, not design or supply chain. 🙂

  4. Hailey Lynne McKeefry
    January 24, 2014

    @t.alex: “The 3D display market is set to grow from 50.8 million units and $13.2 billion in revenue in 2011 to 226 million units and $67 billion in revenue in 2019 worldwide, according to the NPD DisplaySearch 3D Display Technology and Market Forecast Report .

    I do think that 3D didn't do what everything thought. A lot of moving parts had to come together to make it work, including 3D channels, programming and media; the right hardware; customer awareness; price points. It's really tricky. The above may be optimistic.

  5. Eldredge
    January 24, 2014

    @Hailey – I agree with you. Certainly for TV's below a certain (rather large) size, the clarity benefits are providing diminishing returns.

      Of course, I still have a CRT TV in one room, and my most updated unit is a 1080 plasma….not exactly state-of-the-art!

  6. t.alex
    January 25, 2014

    @Hailey,… and how to avoid the motion sickness experienced by some people when they watch 3DTV :-).

    I do believe that content is the most important part for 3D TV work. 

  7. Hailey Lynne McKeefry
    January 25, 2014

    @t.alex, i”ve heard that some people have this type of motion sickness problem with 3D TV. The other piece of the puzzle for me is the need for 3D glasses. My neighbors got a 3D TV and they had two pairs of glasses–which meant that the whole family couldn't watch TV together if it was in 3D, nevermind inviting friends to sit down and watch. Further, there's a lot of confusion in the marketplace about the various approaches to 3D. I worked for a projector company in the not too distant past, in the marketing department, and spent a lot of time creating materials around explaining the benefits of active (read battery powered) glasses over the type you get at the movies, for example.  This type of education takes a lot of time and effort and has to go through the entire supply chain–from the manufacturer to the distributor (how to sell it) to the retailer (again how to sell it, and how to demonstrate it) to the end consumer (why to buy it).  The cool factor wasn't enough to overcome this issue.

  8. Hailey Lynne McKeefry
    January 25, 2014

    @Rich, let me start by saying i'm no accountant, but it would seem to me that one of hte biggest problems of carrying stock in any consumer product situation is that the cost of the materials can shift pretty dramatically. In terms  of glass, there was a  big shortage in 2010 or thereabouts which made it hard to get and expensive. Everyone scrambled to increase capacity and with more supply prices dropped. What i'm getting at is this: if you buy high and get stuck with inventory it can cost you if prices drop (and end product prices erode accordingly).

  9. Hailey Lynne McKeefry
    January 25, 2014

    I did some research and it seems that glasses free 3D TV may be the big story on the horizon. Toshiba has announced plans in this area in the last couple of months: CES: Toshiba Shows No-Glasses 3D TV ; Sees Q1 HDD Shortage .

  10. Hailey Lynne McKeefry
    January 25, 2014

    @Eldredge, I find it disheartening when technology upgrades include the lack of support for older technologies. It forces people to upgrade or go without–and, although EBN is a haven for technophiles, it means that if you can't afford the newer item, you are out of luck. Televisions are in this category largely–and buying something new (say a Tivo or DVD player) becomes impossible if you have an old TV–there's no way to connect it. THe price sensitive nature of these products means that the OEMs are reulctant to add these old interfaces just ot help out the people who haven't upgraded. It's understandable but unfortuneate.

  11. Eldredge
    January 26, 2014

    @ Hailey – I agree. I suppose at times it is unavoidable, in cases where the new and old technologies are completely incompatible. Other times, it seems like more of a business decision or strategy to force consumers into the next technology kicking and screaming!

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