“5G TV” brands lead TV shipment growth (Part 1)

Key Points

• Xiaomi is a well-known mobile phone and Internet company, currently ranking among the top TV shipments in China. Other mobile phone leaders Huawei and OPPO have also joined the TV business, and they have ambitions to develop and expand their TV business in the foreseeable future.
  
• Xiaomi, Huawei, and OPPO do not have any TV production capacity, but outsource it to TV OEMs . TV OEMs classify these emerging TV brands that originated from mobile business as 5G TV customers because TV is considered a core product in their 5G ecosystem roadmap.
  
• Omdia believes that TV manufacturers of mobile phone brands such as Huawei, Xiaomi and OPPO will promote their smart TVs as 5G- enabled TVs in order to differentiate themselves from traditional TV brands in marketing.
  
• Xiaomi is not content with its current position and wants to grow further. Its goal is to maintain its strong position globally, top the Chinese market, and become the largest TV brand in India.
  
• Xiaomi plans to improve its size mix in 2020. It hopes to drive growth in area and revenue by expanding the market share of its large-size TVs.
  
• Xiaomi needs competitive and strategic OEMs/ Original Design Manufacturers ( ODMs ) to achieve its aggressive goals for 2020. In July 2020 , panel shortages forced Xiaomi to lower its 2020 TV shipment target to 14 million units.
  
• As the shipment volume of Xiaomi TVs has been growing massively, it has become crucial for Xiaomi to establish an after-sales service center to manage supply chain costs and customer satisfaction.
  

The success and development of Xiaomi's TV business in recent years has induced peers such as Huawei and OPPO to operate the TV business more seriously. Although they have been making plans for some time, they have not made any decisive actions to penetrate the market. This situation will change in the second half of 2020 , and more TV products will be launched on the market. Huawei and Xiaomi consider TV as a core product in their 5G ecological roadmap. Xiaomi, Huawei and OPPO can optimize their TV panel supply chain resources and benefit from their extensive user and channel base in the mobile field to drive their TV shipments in the next few years. In fact, Xiaomi's TV shipments in China are already among the best, and Huawei , a newcomer to the TV market , has also set a goal for its TV business, claiming to be among the top three in the world within three years. Recently, OPPO Group has set an aggressive TV shipment target for 2021 , focusing on its multiple sub-brands ( OnePlus , Realme and OPPO ) and value propositions to develop its TV business in the Indian market.

Although 5G is not a display technology, the industry has been hoping that its widespread implementation will significantly stimulate the display market and provide various growth opportunities in the future. The most obvious driver for the display industry is that 5G will drive the replacement cycle in the smartphone market; as 5G is promoted, more people will need new smartphones. 5G is fast enough to stream high-resolution TV and video directly with quality similar to fixed-line networks. Consumers in countries like India are now using mobile networks instead of fixed broadband; consumers are connecting their phones to smart TVs. With 5G , consumers will buy more TVs without worrying about content delivery. While 5G may be the best way to deliver 8K content, the concept of an 8K+5G ecosystem also connects different aspects of people's lives with technology and products. However, how exactly this all works and how it adds value to our lives is not very clear at the moment. In addition, it is a challenge to highlight clear differentiation in this crowded TV market.

Xiaomi has always positioned itself as an IoT company and has built the world's largest consumer IoT platform. In early 2020 , Xiaomi announced a 10 billion yuan investment plan for artificial intelligence Internet of Things ( AIOT ) over the next five years . TV is just one of its many smart hardware devices, driving its high cost-performance ( C/P ) value.

Huawei is a strong leader in the information and communication technology infrastructure of 5G and multiple smart devices around the world. It plans to produce smart TVs featuring 5G . Honor ( a sub-brand of Huawei ) has a vision to not only release smart TVs at competitive prices, but also to revolutionize smart TVs into Internet TVs. Huawei calls it " the future of TV " . According to Huawei, its Honor smart TV will be a complete information center, not just a media center.

Mobile phone brand TV manufacturers such as Huawei, Xiaomi, and OPPO will promote their smart TVs as supporting 5G in order to differentiate themselves from traditional TV brands in marketing.

Xiaomi is now the clear leader in China, leaving very little room for others

Xiaomi's 2020 LCD TV shipments and business plans by size and region

• Xiaomi's shipments have maintained excellent growth since 2017, while other Chinese streaming TV brands have performed much weaker .
  

• Xiaomi's outstanding shipment performance in the past two years has attracted great attention from the market. In 2019 , Xiaomi once again attracted market attention after achieving 13 million units in shipments. Xiaomi is not only the clear leader in the Chinese market, but also became the fifth largest TV brand in the world for the first time in 2019. In addition, Xiaomi also developed its business in India in 2019 , threatening the then-leading companies Samsung and LG Electronics. In 2019 , Xiaomi's LCD TV shipments surpassed LG Electronics and ranked second in India.
  

• Xiaomi is not content with its current position and wants to grow further. Its goal is to maintain its strong position globally, top the Chinese market, and become the largest TV brand in India.
  

• Xiaomi's shipment growth was mainly due to shipments of small-size products such as 32- inch and 40- inch in the past two years. But in 2019 , more competitive panel supply and low prices allowed Xiaomi to significantly increase its large-size share and greatly improve its product structure. In 2020 , Xiaomi will focus more on growing shipments of large-size TVs above 55 inches, with a focus on 65 inches. It also hopes to expand its market share of 40 inches, which comes from MTC and is supplied by Innolux .
  

• Xiaomi has free access to TV panel supply chain resources and optimization opportunities. It also benefits from a wider user base from the mobile space and has stronger bargaining power over channel margins ( 6% vs. 13% for traditional brands ). To achieve its aggressive goals for 2020 , Xiaomi needs competitive and strategic OEM/ODM suppliers.
  

• Xiaomi continues to strengthen its supply chain resources, hoping to enhance its position in the super-large size field through the promotion of high C/P ratio. Currently, Xiaomi is a clear leader in the e-commerce market and is expanding its TV OEM supplier portfolio to more than 8 companies.
  
• TCL is one of Xiaomi's most critical TV ODMs , especially for overseas shipments. In order to circumvent India's high import tariffs, TCL supplies complete machine assembly ( CKD ) to Dixon for final assembly in India. In the fourth quarter of 2020 , TCL and CSOT set up TV modules and production lines in India, and supply chain and management efficiency are expected to improve. However, this mass production plan was postponed from the original December 2019. Due to the policy risks of the Indian government, TCL will postpone the time to set up module and TV production capacity.

• Xiaomi is expected to continue to gain a larger market share in 2020. However, the COVID-19 pandemic is also forcing Xiaomi to review its plans, and although Xiaomi prefers to maintain the original plan, it is likely to reduce shipments from 16 million units to 15 million units. If Xiaomi achieves this aggressive plan in 2020 , Xiaomi will lead shipment growth for four consecutive years. Xiaomi announced that it will bring its mobile phone business to the Japanese market, and may also bring TV products to the Japanese market in the future. Xiaomi also plans to expand its TV business to the North American market in the fourth quarter of 2020. However, due to the outbreak of COVID-19 , this plan is currently on hold.
  

• In July 2020 , panel shortages forced Xiaomi to lower its 2020 TV shipment target to 14 million units from its previous forecast of 15 million units.