TCL Corp has started to produce LCD modules on its own to control its costs more effectively amid shrinking demand for LCD televisions.
LCD modules went into mass production yesterday at the manufacturer's headquarters in Huizhou, Guangdong Province, with an expected annual output of 2.33 million units. The company will be able to produce 3 million LCD TVs and 2 million LCD components each year upon the completion of the production line next year.
"It will help meet the company's increasing demand for LCD modules and be less dependent on the suppliers of key components. The project aims to scale down the cost and increase profitability," the company said in a statement.
Experts said panels account for up to 75 percent of the cost of televisions. It is hard for television manufacturers to control costs as they are highly dependent on their suppliers.
TCL will be able to cut costs by approximately 5 percent, Shi Hong, an analyst from Industrial Securities Co, said.
TCL Corp suffered a sharp decline in sales in almost all sectors last month because of the slowing demand. However, sales of LCD televisions almost tripled to 470,936 units in November. For the first 11 months, sales of LCD TVs soared 239 percent to 3.6 million units.
"Demand for flat panel televisions is estimated to reach 15 million units for next year. There is still huge potential as flat panel televisions become commonplace," said Lu Renbo, vice secretary of China Electronic Chamber of Commerce.