Global Shipment of Large-sized TFT-LCD to Increase 17.1% in 2010: TRi

The 2010 global panel market

Battered by the global-meltdown in 2009, when major financial institutions either collapsed or were bailed out by governments and the year of tightened credit given to consumers and corporations in many developed markets, the global thin-film transistor-liquid crystal display (TFT-LCD) panel sector also suffered, undermined by steadily falling panel prices that even dipped below costs. Many makers have been forced to cut or partly halt production to unprecedented levels. Luckily and mostly driven by official subsidies in China that are fueling demand, some panel makers are beginning to see recovery.

Statistics compiled by the Topology Research Institute (TRi), the largest private market researcher in Taiwan, show that the number of large-sized (over-10-inch) TFT-LCD panels to be shipped globally will grow 17.1% YoY in 2009, but, compromised by falling prices, the production value will drop 10.1% from a year earlier.

Optimistic about the 2010 global TFT-LCD market, the TRi forecasts a 18.7% rise in YoY shipment, with demand totaling 573 million large-sized panels, including about 200 million panels for notebook PCs (a 25% YoY increase). About 171 million LCD TV panels are expected to be shipped next year, a 20.5% YoY increase, TRi predicts, and the segment will rebound to the rosier times of 2008.

New Momentum

According to the TRi, notebook PC and TV panels will be the two major applications to drive growth in the global panel markets in 2010. Also helping to fuel growing buys to replace notebook PCs with newer, smaller and smarter devices is the introduction of Microsoft's new operating system (OS) Windows 7, while all major notebook PC brands have been steadily launching new products as netbooks (mini-note PCs) and CULV (Consumer Ultra Low Voltage) notebook PCs. Another driver of shipment growth is the increasing trend for notebook PC brands to adopt LED backlit screens: TRi says that the penetration of LED-backlit notebook PCs will rise to as high as 95% in 2010.

As prices of LCD TVs continue to drop to affordable levels, even by mainland Chinese standards, such trend becomes an incentive for global consumers with CRT TVs to replace the bulky sets with LCD TVs, hence further fueling demand for the slimmer TVs. Also with many governments aggressively promoting digital TV broadcasting, which only works with LCD TVs, such trend will also help to drive demand. Furthermore and as the global economy normalizes, more consumers may be better prepared, as well as more confident, to upgrade to LCD TVs. The TRi says that the average TV-panel size in 2010 will enlarge by 0.7-inch from a year earlier. Other new applications and technologies may also help to drive growth, including organic light-emitting diode (OLED) and 3D technologies as well as electronic-paper applications.

Lower Capacity in 2010

The sluggish market in 2009 forced most panel makers to sizably cut capital spending, resulting in the added capacity in 2010 that will lag that in most previous years: In 2010, the TRi says the global panel capacity will increases only 18.8%, compared with more than 30% in 2008 and 2009. Enigmatically, the whole industry will still be in oversupply next year.

The TRi points out that major panel makers and glass suppliers will likely adjust output by reducing production to avoid excessive inventory; while rising panel sizes are expected to help offset the added capacity.

The researcher says that in the first quarter of 2010, most panel suppliers will try to achieve demand/supply balance by cutting production, and gradually raise utilization to meet simmering demand in the second and third quarters until the fourth quarter, the traditional off-season. Overall, the institute says, the 2010 global panel market will return gradually to equilibrium.

Dominant Overall

Despite undeniably being the world's key production base of LCD TVs, China supplies about half of the global output, but the nation is also the dominant importer of TV-panels. TRi's statistics show that China imports all the LCD TV panels used in production, about 95% of notebook PC panels, and 37% of monitor panels.

However the simple economics of business is likely to change such high import rates in the near future. To set up easier and hence more economical or more competitive access to their single-biggest panel market-China-ever more panel makers in Japan, South Korea and Taiwan are building LCD module (LCM) factories there. To integrate production to become less reliant on foreign supplies, an increasing number of players in China are also setting up panel plants independently or in cooperation with foreign technical partners.

In terms of panel-application production ratio, the TRi says that the top-three players-Samsung, LG Display (formerly LG.Philips LCD Co., Ltd., or LPL), AU Optronics Corp. (AUO)-show similarity: notebook PC-to-monitor-to-TV at 4:3:3. Such ratios help the top players maintain relatively stable profitability and lower cost (achieved by full-capacity production). Sharp of Japan focuses on high-margin TV panels, while some Chinese suppliers such as Beijing BOE Optoelectronics Technology and Infovision Optoelectronics (Kunshan) Co., Ltd. concentrate on monitor panels.

The TRi points out that rising demand for LCD TV panels have been pushing TFT-LCD panel suppliers to turn out proportionately more of such product, especially true for all the major players in Japan; while Korean panel suppliers have also been decreasing notebook PC-panel shipments to turn to higher-margin products.

Home Advantage

Taiwanese panel manufacturers, however, are enjoying rising shipments of netbook panels due to the home advantage: the originator-Asustek Computer Inc.-of the netbook and Acer Inc., a major maker and promoter of the ever popular mini computer are based on the island.

As with cars, luxury goods and mobile phones, China is obviously a behemoth in consumption now and likely in the future, as is also the case for the LCD panel market worldwide. Demands for notebook PC and TV panels have been increasing rapidly in China. The result, according to the TRi, is that competition in this enormous market will continue to heat up among rivals from China, Taiwan, Japan, and South Korea.

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