Under the pressure of a slowing global economy, the television market experienced significant fluctuations last year. Although data from the first half of this year shows a gradual recovery, the market remains in negative growth. To navigate this environment, brands like TCL are expanding their presence in Europe and other international markets to seek growth.
“When you’re a challenger, the market’s ups and downs don’t affect us as much,” said Zhang Shaoyong, Vice President of TCL Industries and CEO of TCL Electronics, during an interview at IFA 2023. “By consistently adhering to our strategies and enhancing our capabilities, we will naturally seize more opportunities.”
IFA, one of the top three global consumer electronics shows, provides an essential platform for global brand exposure. This year marked TCL’s 13th consecutive participation, where it showcased a 115-inch QD-Mini LED TV, photovoltaic products, and other innovations, highlighting its strong hardware capabilities and its vision for expansion in Europe and beyond.
The Steady TV Market and the Trend Toward Larger Screens
The television industry has undergone a significant evolution, moving from black-and-white displays to ultra-high-definition screens, with a clear trend toward larger sizes. TCL’s sales data reflects this shift, showing that more households are opting for bigger screens.
Zhang revealed that in 2021, the market penetration rate for 75-inch TVs grew from 3% to 10%, and in 2022, it increased to 22%. He predicts that this year, the rate for 75-inch TVs will surpass 28%. Additionally, the penetration rate for 85-inch TVs has already reached 9%, a sharp increase from just over 1% last year.
Data from the upstream panel market also indicates this trend. According to RUNTO Technologies, global shipments of large-sized LCD TV panels reached 116.4 million units in the first half of the year, an 8.6% decline year-over-year. However, the shipment area was 80.3 million square meters, a slight drop of just 0.6%.
By July, global shipments of large-sized LCD TV panels were 20.5 million units, a 7.2% increase year-over-year, with the shipment area growing by 22.3%. “A larger screen provides a more immersive experience,” Zhang explained. He believes that the global market for color TVs will stabilize around 200 million units, with these screens becoming progressively larger.
Mini LED: The Future of Display Technology
Display technology has evolved from CRT to LCD, OLED, and now Mini LED (MLED), each generation reshaping the competitive landscape. As the new core of display technology, Mini LED is gaining prominence due to its low power consumption and superior display quality.
A report by CITIC Securities pointed out that 2021 marked the commercial debut of Mini LED. With anticipated reductions in supply chain costs and a rebound in display industry demand by 2023, further market penetration is expected. Despite negative growth in the domestic TV market in the first half of this year, Mini LED products have seen substantial growth, with sales doubling during the 618 shopping festival compared to the same period last year.
Six years ago, TCL began investing in Mini LED research and development, recognizing it as the “next generation display technology.” By 2019, TCL was the first company to achieve mass production of Mini LED TVs. In 2022, TCL’s high-end Mini LED TVs secured the top retail market share in China, and global shipments increased by 114.5% year-over-year in the first half of this year.
At IFA 2023, TCL unveiled its latest 115-inch large-screen high-end Mini LED TV overseas, featuring over 20,000 backlight partitions, XDR 5000 nits peak brightness, and the latest Quantum Dot Pro display technology.
Zhang highlighted that for screens larger than 75 inches, traditional LED is not cost-effective, whereas Mini LED offers much higher value, especially for sizes of 75, 85, and 98 inches. He sees QD and Mini LED as the dominant technologies in the large-screen sector.
The cost of Mini LED continues to decrease. Zhang predicts that LCDs will be largely replaced by Mini LEDs within the next five years, with the market share of standard LCDs becoming marginal.
“Through rapid industrialization, the cost of Mini LEDs could be reduced to as low as $20 to $30,” Zhang stated. “The improvement that Mini LED brings to LCD picture quality is transformative; they are fundamentally different.”
Reports from various research institutions suggest that the next 2 to 4 years will see a rapid expansion in Mini LED production capacity. According to Arizton, by 2024, the global Mini LED backlight market is expected to reach $2.32 billion, with a compound annual growth rate of 148% from 2020 to 2024. Omdia also forecasts that global sales of Mini LED backlight TVs will grow from 4 million units in 2019 to 52.8 million units by 2025, with an average compound annual growth rate of 53.73%.
Committed to Overseas Expansion and Differentiated Innovation
In the first half of 2023, TCL’s global shipments of smart TVs reached 11.46 million units, showing a year-over-year growth of 12.9%. Zhang Shaoyong expressed his view, stating, “What TCL needs to do is perfect the TV picture quality. We should focus on genuine innovations in our main line of business, continuously striving to improve. That is what truly matters.”
According to Omdia, TCL TV’s global shipments in the first half of 2023 reached 11.47 million units, accounting for a 12.4% market share. Among Chinese brands, it ranked first and second globally. Much of this success can be attributed to TCL’s long-term commitment to globalization. Since entering Vietnam in 1999, TCL has established 48 research and development centers, 32 manufacturing bases, and sales organizations in over 80 countries, serving more than 960 million users worldwide.
In North America, TCL’s smart TV shipments in the US increased by 25.6% year-over-year in the first half, ranking among the top three in retail volume. In emerging markets such as Asia-Pacific, Latin America, and Southeast Asia, the first-half shipment growth rate reached 17.6%, with TCL leading in markets like the Philippines, Australia, and Myanmar. In Europe, TCL’s first-half shipments in France surged, placing it second in the industry, while in the Czech Republic and Sweden, it ranked third.
TCL’s success in overseas markets is due to its strategy of localizing operations, including local R&D, production, sales, and services. For example, in Europe, TCL invested nearly $100 million in its Polish manufacturing base to enhance automation and intelligent manufacturing capabilities, with an annual production capacity of over 5 million units.
Zhang also emphasized the vast potential of overseas markets, noting that TCL has maintained double-digit growth over the past two years. He shared that TCL’s overseas development is now in its second phase: driving growth through brand value. “Since 2021, we have clearly defined our strategy for this second phase. In terms of brand value growth, we aim to produce products as good as those of Samsung and Sony.”
Currently, TCL is striving to be a global leader, but it also faces challenges in achieving major technological breakthroughs. However, Zhang is not overly concerned. In his view, with the current state of technological advancement, it is difficult to identify unmet needs that brands haven’t already addressed. “Today’s innovation can often feel excessive, rampant, and even meaningless, catering mostly to niche markets,” he stated.
Zhang believes that revolutionary innovations, like those of Steve Jobs, are rare. “We are very cautious about differentiated innovation,” he noted. “Our focus should be on perfecting TV picture quality. Instead of chasing unattainable, futuristic ideas, we need to innovate within the main track. Continuous improvement is what matters.”
He remains unfazed by changes in the current market landscape. As a challenger, TCL is experiencing growth in markets worldwide, from the US and Europe to Southeast Asia. Zhang believes that until TCL’s global market share surpasses 15%, the company won’t prioritize regional market shifts.
“If you fish in a pond with 100 fish and you catch 5, and then there are 95 left and you catch another 5, the difficulty remains the same,” Zhang explained. “By following our strategies and enhancing our capabilities, we will naturally catch more opportunities.”
Article source: TMTPost, Author: Du Zhiqiang, Edited by: Zhong Yi.
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