Panel suppliers have recently lowered their shipment forecasts for LCD TVs in China to 32-35 million units from originally 35-36 million units as the sales performance during China's Labor Day holidays in May was lower than expected, according to market sources.

LCD TV sales in China during the Labor Day holidays were only 2-2.4 million units, lower than the expected 2.9-3 million units, the sources noted.

First-tier vendors Samsung Electronics, Sony and Sharp were among the top-five vendors in China during the holiday period, with their sales enabled by the launch of LED-backlit models and price reductions, the sources said, adding that China vendors Hisense and Skyworth were the remaining two in the top-five.

Local vendors collectively had 70% of the China LCD TV market in 2009, but their share dropped to 58% during the Lunar New Year holiday period in February 2010, the sources said. First-tier vendors are expected to take 50% of the China market in 2010, the sources added.

The sources indicated that in general tight panel supply will persist throughout 2010, but the situations in different regions may change. Earlier this year, panel makers were more focused on the strong demand from China, constraining supply to Europe and the US.

But as demand from China is weakening now, panel shortages in Europe and the US will improve, the sources said.

Overall demand for LCD panels is expected to remain strong in June, and the third-quarter outlook is still optimistic, the sources said. But the impact of the availability of new capacity in the industry later this year remains to be seen, the sources commented.

For the larger-size segment, LED-backlit LCD TVs have become the mainstream in China, the sources said.

Hisense reduced the price of its 47-inch LED-backlit TV during the Labor Day holiday by 5,000 yuan (US$731.95) to 9,000 yuan, while LG Electronics dropped the price of its 47-inch model to 14,488 yuan coming with a free 32-inch CCFL-backlit LCD TV, the sources said.

LED-backlit LCD TVs are expected to account for 30% of the China LCD TV market in 2010, reaching over 50% in the second half of the year, the sources noted.