TV market: chips and memory now cost more than the LCD panel

This paradigm shift, highlighted by recent reports from the research firm Omdia and Asian media outlets (see Digitimes news), is completely upending the economics of television manufacturing. Until now, manufacturers had managed to maintain aggressive prices, often offsetting weak margins with advertising revenue and data monetization generated after the sale of their Smart TVs. But the current shortage of components and the congestion at foundries such as TSMC, which are running at full capacity to satisfy the gargantuan demand from AI servers, are causing costs to explode at the very base of the production chain.

 

On-board electronics now cost more than the screen Concretely, the cost of motherboards that include the processor, Ram memory, Nand storage, and [abc]Wi-Fi[/abc] modules now exceeds that of the [abc]LCD[/abc] panel on smaller models (32", 40" and 43"). For a 32" [abc]HD[/abc] television, the share of the audio-video processing chip in the total component cost has gone from barely 10% in the second quarter of 2025 to nearly 50% in the third quarter of 2026. The culprit is a historic surge in generic DRam, whose price in August 2026 was 4.4 times higher year on year (reaching $25), while Nand flash memory jumped to a price 8.9 times higher than the previous year ($30.5).

Pressure is inevitably spreading to larger diagonals. Still according to Omdia, on a 55-inch [abc]Ultra HD[/abc] [abc]4K[/abc] LCD television, the cost of the motherboard literally soared to $118.2 in the third quarter of 2026 (compared with only $33.9 a year earlier). This amount now exceeds the lowest price of a bare panel of the same size ($116) and is close to its average price ($123).

 

The scheduled disappearance of low-cost TVs? This explosion in production costs, which also affects power management circuits and display chips (DDI for Display Driver Integrated Circuit), has a direct impact on the profitability of industry giants such as Samsung or LG Electronics. At LG, semiconductor purchases for video devices (TVs included) have moreover risen by more than 19.4% year on year to around 175 million dollars. Faced with this untenable situation, the entry-level TV offer as we know it is clearly under threat. As is already being seen in the smartphone market (see our news item Smartphone market: the scheduled disappearance of phones under $200), manufacturers may be forced to simply sacrifice their most affordable models, or drastically reduce their performance compared with previous generations and thus maintain a floor price.

 

The premium segment also under strain While high-end televisions offer manufacturers more comfortable profit margins, allowing them to absorb the shock with somewhat greater flexibility, they will not escape inflation. Industry sources expect memory prices to continue rising throughout 2027. This increase should logically be passed on in full to consumers, especially since the sector is simultaneously preparing to integrate new, highly anticipated technological standards, both hardware and software, such as the future HDMI 2.2 standard and likely developments in dynamic [abc]HDR[/abc] formats (such as HDR Dolby Vision 2, see our news item IFA 25 > HDR Dolby Vision 2, everything you need to know about this new quality standard!).

 

Those who were betting on a continued decline in price per inch will have to revise their calculations.