2008-2009 DATA CONSULT. All rights reserved.
MARKET INTELLIGENCE REPORT ON

NATIONAL TELEVISION INDUSTRY AMID GLOBAL ECONOMIC CRISIS
October  2008

Current issues

The global crisis that surged to surface in September this year is feared to have bad impact on the country's electronics industry. A number of electronics manufacturing companies already cut production by 5%-10% since September 2008. The production cut followed falling demand on the domestic market.

The television on technology has advanced rapidly pushing up demand. Rapid development has been recorded in the technology from cathode ray tube (CRT) to flat screen and now to Plasma Display Panel (PDP) and Liquid Crystal Display (LCD) TV technologies.

The LCD market in Indonesia has grown fast with the world trend leading to digital product.  Conventional TV sets using CRT began to be put behind in the world market.  The television on trend in Europe, Japan, the United States and Australia, which are the major market of television on products, shows a sharp fall in demand for CRT TV sets.  Currently TV market began to be dominated by Plasma and LCD TV sets.

Early the 2000's constituted a new era for TV industry. TV producers began to produce latest technology TV sets known as Plasma and LCD TV sets. The appearance of the two variants greatly attract consumers contributing to strong growth of TV industry in the country. 

In 2007, TV set sales rose 12.5% to 4.6 million units from 4 million units in the previous year.  The new variants of LCD TV sets contributed more to the growth. Big discount offered by producers toward the year end attracted buyers.  The new variants of LCD flooding the domestic market include Scarlet  of  LG, Aquos  of  Sharp, etc. 

The expanding  market of  LCD in  Indonesia , has prompted principals  to make Indonesia  as the production base  for LCD TV. In 2005, PT. LG Electronics Indonesia already had production facility for LCD with a capacity of 50,000 units per month.

Earlier TV market in the country was dominated by producers with Japanese principals such as Sharp, Toshiba, Sony, etc. However, in the past several years, LG Electronic Indonesia (LGEIN) and Samsung Electronics Indonesia with principals in South Korea have succeeded in grabbing a considerable share of the market breaking the domination of the Japanese technologies.

Meanwhile, early October, 2008 the government  offered three tax incentives to boost electronics industry including abolition of luxury sales tax on certain electronic products,  import duties (paid by the government) on basic materials for electronic components  and abolition of 30% income tax  on investment in certain business sectors in certain areas in three years.

Product Descriptions

Cathode Ray Tube (CRT) is a TV technology with TV set having curving screen and relatively heavy in weight. CRT technology uses tube to shoot electrons that do the scanning on the screen and produce phosphor on the CRT screen shining and forming pictures.

Liquid Crystal Display (LCD)

LCD Display is made of combination of small  thin-film transistor (TFTs) responded with electric current, liquid  inside to pass  or hold white shine  produced by backlight.  LCD produces color through a process of closing and opening. They will hold the length of spectrum of certain color of white color and will pass the right color. The intensity of shine passed to go through liquid crystal matrix which produces LCD TV.

LCD uses no tube  but liquid crystal, neither does it need shooting electrons but it needs electric current. LCD TV, therefore, is slimmer  and could display  clearer pictures and the eyes are not easily tired as when watching  CRT TV.

Plasma Display

Plasma display is a self emitting display. The screen of Plasma TV is produced from individual pixel cell allowing electric pulse to stimulate natural gas - normally xenon and neon - which lit it. The shine will illuminate balance between red, green or blue phosphor in each cell to turn out the right color of the shine.

Gas-based Plasma is superior in the size of the screen that could be very large up to 64 inches. Now larger size of more than 100 inches has even been produced.  However, Plasma technology has weaknesses as the technology could not be used for smaller TV sets that have the largest share of the market in Indonesia especially for households.

LCD Technology

LCD technology is the active type of LCD matrix which depends on Thin Film Transistors (TFT) in the form of transistor frame and capacitor. It is matrix active technology which enables LCD screen to display moving picture.

LCD technology in TV has superiority such as low radiation level as it is not gas based like plasma. Reflection level of LCD TV is low. There is almost no reflection on the TV screen from other object when it is being turned on.  In addition, the LCD is more durable   than plasma TV. If used normally or 8 hours per day, Sharp LCD TV could work for 60,000 hours

LCD TV is not as large as plasma TV, but with the development of technology at present LCD TV could be produced with wider screen. The size of LCD TV screen could still be widened but it will take time as the number of pixels to be assembled in a TV unit is millions. Currently the largest LCD TV is only 42 inches.

Currently LCD has various technologies such as Super Twisted Nematics (STN), Dual Scan Twisted Nematics (DSTN), Ferroelectric Liquid Crystal (FLC) and Surface Stabilized Ferroelectric Liquid Crystal

Producers and Production capacity  

The fast advancing technology boosts expansion of production capacity of TV sets.  Producers rush to increase their capacity to meet growing demand for products of high technology. Most producers produce not only television sets but also other electronic goods such as electrical appliances and electronic household goods.

In 2002, the country's production capacity for   television set totaled 3,358,000 units per year.  In 2007, the capacity shot up to 12,727,000 units per year, or an increase of 279%.

The high growth was attributable mainly to a number of large producers such as  Samsung, LG, Panasonic, Sharp, etc. which have continued to expand their capacity in the past three years  especially after the launching to the market of Plasma TV technology followed by LCD  with digital technology. Digital technology has greatly attracted consumers that demand for digital TV sets has remained high.

Expansion of the TV market, which  has been  boosted by the  rapid  change in the market appetite  from conventional  TV of CRT  to  LCD, prices being more within purchasing power and competitive,  and  growing number of  variants, has prompted producers to expand their production capacity to meet the market demands.


Big expansion has been made by PT. Sharp Electronics Indonesia by increasing its capacity to 1.7 million units per year from 180,000 units earlier.   PT. Toshiba Consumer Product Indonesia has a production capacity   of 1. 5 million units per year, up from 70,000 units six years ago.
Previously television manufacturing industry in the country was dominated by vendors from Japan, but lately electronic giants from South Korea have succeeded in bragging a considerable share of the market breaking the domination of the Japanese brands. Korean brands like Samsung and LG have gained strong market foothold in the country. PT. Samsung Electronics Indonesia has expanded its capacity to 1,340,000 units per year from 400,000 units earlier. PT. LG Electronics Indonesia increased its capacity from 1 million units per year to 1,150,000 units per year at present. 

The country's production of television sets is expected to shrink 5% in 2008

In the past five years, the country's productions of television sets are estimated to grow by 6.3% per year   from 5.2 million units in 2003 to 6.6 million in 2007.

The country's production of television sets is expected to shrink 5% in 2008 as a result of the global economic slowdown and the global financial crisis. A number of producers   have been reported cutting production by 5% -10%, as market demand has plunged following declining purchasing power of the people in many areas. In Sumatra, many farmers suffer a decline in purchasing power as a result of the falling prices of primary commodities like palm oil, rubber, coffee and cacao.

PT. Panasonic Indonesia, PT. Panggung Elektronik and PT. Sharp have cut their production including TV production by 5% since September 2008. The trend is expected to continue until the end of the year. PT. Toshiba also plans to cut production by 10%. 

The sharpest cut in production is made by PT. LG Electronics Indonesia (LGEIN) slashing its production of televisions and refrigerators by as a high as 20%. LGEIN also plans to lay off 20% of its workers.

The production targets, therefore, have been revised down.


Indonesia LCD production base

Seeing the market potential and growing demands, a number of foreign electronics principals have made or plan to make Indonesia as their production base.

The production center of LG Electronics in Cibitung, Bekasi, has been made production base for LCD television sets for Asia Pacific and Middle East markets. The Korean company started producing TV in Indonesia in 1999 and in 2005 it started assembling LCD TV for local market.

Its LCD production capacity is 50,000 units per month partly for export.  Around 80% of its LCD production is exported mainly to Asia Pacific region and the rest to Middle East and Australia.

Until now, the panels of its LCD TV are still imported from South Korea. Other components are already produced locally.  Around 60% of television components needed in the country are still imported.

LG already has LCD TV production centers in other countries such as Mexico, China, Brazil and Korea itself.

Panasonic Gobel Indonesia started producing LCD TV in January 2007. Its production capacity for LCD and Plasma is around 50,000 per month - 20,000 units of plasma and 30,000 units of LCD. 

Its LCD panels are imported from Japan. The types of LCD TV produced by Panasonic in Indonesia are small ones 26 and 32 inches, which dominate demand. Panasonic plans to build a production facility for LCD TV in the country.


Toshiba Consumer Product Indonesia started to produce LCD TV in 2004 in small quantity around 50,000 units of 14 and 20 inch units.  In 2005 it began to produce Plasma and LCD in larger size of 27, 32, 37 and 42 inches. In 2006, Toshiba launched Plasma TV with larger size of 47 inches. 


Most of its production of plasma and LCD TV are exported to various countries. Only around 10%-20% of its production are dispose of on the domestic market.  Local components make up only 10% of TV components. The bulk or 90% are imported from Japan and Taiwan.


A number of electronic goods producers in Indonesia such as PT Sharp Electronics Indonesia (SEID) and PT Samsung Electronics Indonesia also assemble LCD TV in Indonesia with panels imported.

However, now the television market is no longer dominated by Japan and Korean technologies. New competitors have entered the market such as PT. Changhong Elektronik Utama of Sichuan Changhong Electronics Co, LTD known as the number one producer of television sets in China. 


Changhong's market share, however, is still small.  Previously Changhong was known as producer of air conditioner (AC) in Indonesia. It has a 15% share of AC market or the second largest in Indonesia. Changhong Indonesia, therefore, has been encouraged to strengthen its brand awareness by producing TV sets of the latest technology.

Changhong is not inferior in technology facing other non-Chinese producers. Outside Indonesia, Changhong is the fourth largest producer of plasma TV panels after Panasonic, LG and Samsung.

Changhong, in a bid to boost its TV sales, produces a number of new latest products with high-end target.  For this market segment, Changhong offers plasma TV and LCD TV.   Among its main products is LCD TV of the LT3219P type measuring 32 inches and 37 inches.

Its superiority lies in attractive features  such as the slot for USB (USB 1.0, USB 1.1, USB 2.0)  and memory  card (CF, MD, SM, MS, SD, MMC) in its rear panel.  Also it already has HDMI input for picture display of high definition.  Its LCD TV is also attractive with its PIP (picture in picture) feature presented in four selected models. It seems the LCD TV has   been more than satisfactory as a flat screen TV.

Main players 

The first producers of LCD and Plasma TV in the country were Japanese companies Toshiba, Sharp, Sony, Sanyo and Hitachi. Later Korean brands Samsung and LG entered the market.

PT Sharp Electronics Indonesia (SEID)

Sharp began to do business in Indonesia early 1970, when PT Yasonta offered Sharp TV sets for the first time in Indonesia. The company was later named by Sharp Corporation in Osaka (Japan) its representative and sole assembler of black and white Sharp TV in Indonesia in 1971. Later in 1975, it produced color TV sets. 

In  2005,  PT Sharp Yasonta Indonesia , which is a joint venture between PT Yasonta  and  Sharp Corporation, was renamed  PT Sharp Electronics Indonesia (SEID), which was  93% owned by Sharp Corporation  with  7% owned by the Indonesian partner .

In 2007 after 37 years in operation, Sharp turned out its 10 millionth unit of CRT TV set and plans to produce television tubes in the next 10 years.  SEID still maintains its production facility for   CRT TV in Indonesia as demand for the cheaper product of TV is still quite strong on the domestic market.

TV sales contribute around 40% to its total sales.  In 2008, SEID is set to chalk up Rp 3.8 trillion in sales. Sales on the domestic market make up around 40% or Rp1.52 trillion of its sales.

In 2008, SEID hopes to have a 30% share of TV market in Indonesia, up from 22% in 2007.  In 2008, SEID plans to produce 1.5 million units of CRT TV. Its production capacity   for CRT TV is 1.7 million units per year.

In 2009 it is set to have a 32% share of the domestic market. Currently SEID produces conventional TV sets (CRT with curving screen), flat CRT TV, and slim flat CRT TV. Its still continues to produce conventional TV set making up 30% of its total production.

PT. Toshiba Consumer Products Indonesia

PT. Toshiba Consumer Products Indonesia (TCPI)  came on line in Indonesia in the 1970's by producing electronic equipment including  television sets , home appliance, computer system and business communication, and  copiers, printers, facsimiles, scanners  and  e-solution.

The company started producing television in Indonesia in 1996. Currently it has production capacity at 1.7 million units per year. In other countries Toshiba has production bases in Japan, the United States, China, Vietnam and Britain. Its factory in Indonesia, however, is larger than other factories in other countries. Toshiba plans to move all of its production facilities to Indonesia this year.

Until now TCPI still imports LCD panels, but it gradually increases the use of local components.  In 2003, its local content was 34.5%, up to 40.5 % in value. In 2004, TCPI sales were valued at US$ 206 million, including exports valued at US$ 170 million and US$ 37 million in domestic sales.

Toshiba exports 80% of its production to 40 countries in Asia not including China, Korea, Oceania countries, Middle East, Africa, and Russia.  Toshiba's share of the domestic market is 15%.

In 2007, Toshiba produced its 10 millionth unit of TV sets since its came on line in the country in 1998. Toshiba has made Indonesia as its production base in his region. Toshiba is the largest producer of TV sets in the country with competitors including Sharp and Panasonic which produce TV sets only for domestic market.  LG exports part of its production but not as large as exports by Toshiba.

In a bid to expand market for LCD, the principals Toshiba and Sharp in Japan agreed to cooperate in semi conductor and LCD business in 2008. Under the cooperation Toshiba uses the LCD module of Sharp for its television products of 32 inches and larger; and Sharp uses the computer chips of Toshiba for its television to produce better picture performance.

TCPI has a subsidiary named PT Toshiba Visual Media Network Indonesia (TVMNI) which came on line in 2002. TVMNI is owned by Toshiba Singapore Pte Ltd  and  PT Topjaya Sarana Utama.

TVMNI operates as a distributor of Toshiba products in Indonesia providing after sales service especially for visual products of Toshiba Plasma and LCD televisions.

PT. Samsung Electronics Indonesia

PT. Samsung Electronics Indonesia produces various types of electronic equipment.  Samsung brand is quite popular in the markets of LCD TV, Slimfit TV, Plasma TV, hand phone, computer monitor, multifunction printers, refrigerators, washing machines, AC, DVD players and tape, audio video (hifi), MP3, home theater and bluray.

Samsung has a production capacity of 1,340,000 units of TV sets per year. Its factory is located at Cikarang, West Java. 

In 2008, a number of variants have been produced by Samsung such as plasma TV with color contrast ratio of 1,000,000:1.  Samsung produces LCD TV with high technology with color contrast ratio of 70,000:1 with crystal design technology.

PT. LG Electronics Indonesia

PT LG Electronics Indonesia (LGEIN) produces   TV since 1999 in Cibitung, West Java. In 2005 it began producing LCD. LGEIN makes Indonesia as its production base for LCD   television for Asia Pacific and Middle East in addition to domestic market.

Currently, its production capacity for    LCD is 50,000 units per months or 600,000 units per year. Around r 80% of its production is exported to various countries mainly Asia Pacific, Middle East and Australia.

Its LCD panels are still imported from Korea, but many of other components have been produced locally. Around 60% of its LCD components are imported.  LG has production center for LCD TV in a number of countries including Mexico, Indonesia, China, Korea and Brazil. 

In 2007, LGEIN had a 20% share of LCD TV market in the country. This year it hopes to increase its market share to 30%.

In 2008,   LGEIN focused to expand its LCD TV market with a new product of Scarlet series, LG hopes to expand its share of the market. In order to reach the target, LGEIN has launched road shows to large cities from Jakarta to Bandung, Surabaya, Pekanbaru, Medan and Makasar……………….

 
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