Omdia: Advice On How Display Companies Might Navigate Tariffs Uncertainties

March 6, 2025 by Dave Haynes

Research firm Omdia’s Chief Analyst for looking at the display industry has a post up looking at the implications the tariffs battle might have on industry, and now that we’re in it – acknowledging things may have changed twice by the time I finish this post – it is a worthwhile read.

Deborah Yang gets into what’s been going on or expected to happen, tracking back to the start of February – though her Omdia post is from yesterday.

Here are some selected passages from it, as I have stripped out the monitor/notebook stuff that is less relevant to the digital signage and pro AV communities. As happens, the research tends to be about the much, much larger consumer TV business, and not pro displays, but there are common threads.

Display industry participants are concerned about the evolving tariff landscape and are struggling to mitigate associated risks. Amid unpredictable tariff policies and global geopolitical uncertainties, some industry players had adopted the mindset that “doing nothing is doing everything.” This sentiment reflects the belief that supply chain participants have limited options or feel powerless navigating these challenges.

Managing unpredictable tariff policies has become a top priority for the industry. To stay resilient, businesses must take proactive measures, develop scenario-based strategies, and prepare for multiple potential outcomes.

Actions taken in February to mitigate tariff risks

Ahead of the February 4, 2025, tariff implementation, TV and IT display makers took strategic steps to minimize risk and ensure supply chain stability:

TV industry actions:
· Maximized TV production in Mexico for manufacturers with existing facilities.
· Increased TV inventory levels and week of sales (WOS) for the US market.
· Adjusted TV panel demand forecasts for 4Q24/1Q25.
· Conducted assessments and prepared contingency plans for potential additional tariffs.

Following the implementation of new tariffs, post February 4, 2025, TV and IT display makers are adjusting their strategies:

TV industry actions
· Continuing TV set production at factory sites in Mexico and advancing output where possible.
· Maintaining high inventory levels and higher WOS for the US market.
· Keeping the TV panel demand forecasts unchanged for 1Q25.
· Adopting a wait-and-see approach; no decisive action has been taken regarding a potential production shift from Mexico to other locations.
· Feasibility studies revealed challenges with alternative production sites. Manufacturing in the US is not viable due to costs exceeding 25% while expanding production in South-East Asia would raise costs. Manufacturing TVs in Egypt or Eastern Europe would only double lead times and raise supply chain costs.

TV display industry actions:
· Maintain and accelerate TV production in Mexico.
· Sustain high inventory levels and WOS for the US market.
· No immediate changes to 1H25 TV panel demand forecasts but a potential demand correction in 2H25.
· Explore cost-effective solutions, including automation for production reshuffling and supply chain rerouting.
· Adopt a wait-and-see approach; seek new business opportunities outside the US amid US market uncertainty.
· US TV demand will be impacted, particularly for small- and mid-sized TVs produced in China due to the additional 10% tariff.
· Market outlook is positive in 1H25, but negative in 2H25.

Scenarios and impacts – No tariffs for Mexico, but tariffs for China

TV display industry
· TV production in Mexico stabilizes.
· US inventory levels or WOS must be reduced. TV sell-through, brand competition, and TV panel prices will be key variables.
· US TV panel demand may normalize or see slight declines in 2Q25.
· Remaining TV production in China will relocate to South-Eastern Asia.
· Minimal impact on US TV demand, maintaining a neutral effect on the TV display industry; panel must adopt a production-to-order strategy in 2Q25 to maintain supply chain bargaining power in panel price negotiations.

Scenarios and impacts – Tariffs for both Mexico and China

TV display industry
· TV production in Mexico will expand to alternative locations, including Southeast Asia, Egypt, and Eastern European (like e.g. Poland.
· Factory shutdowns in Mexico will force TV makers to restructure production and reroute supply chains.
· Higher supply chain costs and longer lead time will create additional challenges.
· Inventory levels and WOS for the US market must increase, requiring stricter inventory management.
· TV panel demand forecast is expected to decline.
· Prepare for the worst-case scenario –tariff costs may be passed on to retailers and consumers, driving higher average selling prices for TVs in the US and reducing TV demand.
· Significant downward pressure on US TV demand is expected.

Scenarios and impacts – Tariffs on Chinese displays

TV display industry
· There is a low possibility unless the US government targets China’s market dominance and TV panel profits.
· If tariffs are imposed on Chinese-made TV displays, Chinese panel makers may implement aggressive pricing strategies for the US market reducing profit margins . This situation may present a hurdle for the transition to larger-sized displays in the US.