Taiwan's FPD Production Value Down 2.4% QoQ in Q1: IEK-ITIS
2010/06/07 | By Quincy LiangThe flat panel display (FPD) industry in Taiwan turned out US$11.97 billion worth of productsin the first quarter of 2010, a 2.4% quarter-on-quarter (QoQ) decline but a 67.5% year-on-year (YoY) increase, according to the IEK-ITIS (Industry & Technology Intelligence Services) in Taiwan.
FPDs made up US$8.2 billion of the total production value, a 5.5% QoQ decline but a 67.1% YoY increase, with FPD parts and components contributing US$3.77 billion, a QoQ increase of 5.3% and YoY rise of of 68.4%.
Large or over-10 inch thin film transistor-liquid crystal displays (TFT-LCDs) contributed US$6.9 billion to the overall production value (down 3.4% QoQ but up 85.1% YoY), while small- and medium-sized TFT-LCDs contributed US$1.06 billion, down 15% QoQ and up 20.3% YoY; TN/super twisted nematic (STN)-LCDs US$170.6 million, down 22% QoQ and down 22.7% YoY; and organic light-emit diode (OLED) US$61.56 million, up 2.1% QoQ and up 7.6% YoY.
Color filters accounted for US$952.5 million, down 6.2% QoQ and up 86.1% YoY; polarizers for US$402.8 million, up 10.9% QoQ and up 45.5% YoY; glass substrates US$1.27 billion, up 7.8% QoQ and up 58.3% YoY; and backlit modules US$1.1 billion, up 11.8% QoQ and up 76.8% YoY.
Minor Decline
The IEK-ITIS says that the production value of large-sized TFT-LCD panels slid modestly from the previous quarter in the first quarter, a traditional low season, due mainly to low parts inventory at downstream makers in the fourth quarter of 2009 that fueled panel procurement and price hikes in the first quarter.
Quotes for IT and notebook PC panels rose during the period, while that of TV panels remained flat.
With rapidly rising penetration of smartphones, Taiwan makers' shipments of small/medium-sized TFT-LCD panels declined only 15% QoQ in the traditional low season.
The shipment of OLED panels in Taiwan enjoyed a QoQ increase of 2.1% and a YoY increase of 7.6%, due to strong downstream demand. However, counterparts in China have begun trial-production of passive-matrix (PM)-OLED products, which may impact the global OLED supply chain.
The overall turnover in the TN/STN panel sector in Taiwan continued to drop 22% QoQ and 27% YoY in the first quarter, to which the IEK-ITIS attributes the shrinking cellphone application market due to being significantly replaced by TFT-LCDs.
Key Parts
The production value of the FPD key-parts sector contrasted that of FPD: rising
QoQ 5.3% and YoY 68.4%, compared to a 5.5% QoQ decline for FPD.
Color filter production value dipped 6.2% QoQ in the first quarter due mainly to weaker demand in China.
The production value of polarizers grew 10.4% QoQ in the first quarter, due mainly to strong demand in China for both consumer electronics and IT products.
The glass-substrate production value in the first quarter increased 7.8% in the traditional slow season, due to earlier inventory purchase by downstream makers that undermined supply of 5G and 6G substrates.
Consistent demand has driven up production value of the backlight modules sector by 12% QoQ, with two main growth drivers: the rapid rise in penetration of LED backlight modules in TV and monitor panels, and rising number of Chinese TV makers launching LED-backlit LCD TVs this year. In addition, Korean TV makers' aggressive popularization of LED LCD TVs is driving backlight modules shipments from Taiwan.
Major Events
1. Shenzhen Huaxing Photoelectric Technology Co. Ltd., a subsidiary under major Chinese home-appliance brand TCL Corp. and a maker of TFT-LCD panels, broke ground for a new 8.5G panel factory in Shenzhen, Guangdong Province, China on January 16. The new plant is the third of its kind in China with an investment of 24.5 billion renminbi.
Initially some 10 billion RMB will be invested to build monthly capacity of 100,000 substrates, with mass production to come online by the end of 2011.
Huaxing is the first TFT-LCD panel maker in China set up by a downstream system maker who aims to vertically integrate production towards upstream key parts. A few key staffers as the sales and engineering managers have been recruited from Chimei Innolux Corp. of Taiwan.
Insiders say that, with all three Chinese panel makers completing new-generation panel facilities, making policy decisions will become tougher for the Chinese central government when considering allowing newcomers with foreign capital to set up TFT-LCD plants in China.
2. The Taiwan Cabinet recently approved the regulations governing Taiwan firms to set up 6G-and-higher panel plants in China, allowing three such panel plants to be set up in China.
Leading the Way
AU Optronics Corp. (AUO) of Taiwan has applied to the Investment Commission under the Ministry of Economic Affairs (MOEA) to set up a 7.5G facility in Kunshan, Jiangsu Province, China with a budget of US$3 billion. Perhaps in light of such move, Japanese glass supplier Asahi Glass Co. (AGC) has halted an investment project in Taiwan to evaluate the same in China, while Corning Inc. of the United States, the world's largest glass maker, has also announced its willingness to invest in China.
3. In late April, Taiwan's AUO announced a full acquisition of AFPD Pte., Ltd., subsidiary of Toshiba Matsushita Display Technology Co., Ltd. (TMD) in Singapore and a leading manufacturer of LCD panels based on low temperature poly-silicon (LTPS) technology, for US$39.9 million.
AFPD operates a 4.5G LTPS fab, currently the world's latest-generation LTPS line, with monthly capacity of approximately 45,000 sheets. Insiders say such acquisition allows AUO to extend manufacturing in Asia in addition to Taiwan and China. The Singaporean plant, being strategically located, will be ideal to serve high-end display markets in South Asia, the Middle East, Australia and New Zealand. To meet future trend for smartphones with LTPS technologies, AUO will not only be faster but also more competitive in the high-end cellphone market.
4. In early March, two major backlight module suppliers of the AUO Group, Forhouse Corp. and Taiwan Nano Electro-Optical Technology Co., Ltd., announced a merger, leaving Forhouse in tact and with the merger scheduled for September 1, to take the form of one Forhouse share for 1.51 Taiwan Nano's.
Forhouse focuses on supplying backlight modules for mid- and large-sized panel applications as monitors, and Taiwan Nano on small/mid-sized application markets as notebook PCs. Insiders say the merger will also integrate products from the two firms to streamline one-stop-shopping.
Currently, orders from parent AUO account for 80% to 90% of sales for Forhouse and Taiwan Nano. A senior Forhouse executive says the merger enhances Forhouse's operational efficiency by resource integration to streamline upstream key material supply as well as downstream application development.
Institutional investors say the merger, including an earlier intra-group merger between LED maker Lextar Electronics Corp. and Light House Technology Co., Ltd., reflects AUO Group's aim to cut cost via building economy of scale.
Prospect
The IEK-ITIS says system makers' hesitation to restock parts, likely due to global economic uncertainties, resulted in surging parts re-inventorying; while urgent orders in the first quarter in the FPD segment fueled demand in the traditional low season.
However, moderate demands in the high and low seasons, according to IEK-ITIS analysts, represent year-end demand has yet to stabilize and return to normal, so most system makers go with the flow, placing rush orders in view of demand and cutting parts orders otherwise. Such survival tactics impact planned capacity allocation and expansion by the whole FPD supply chain, as well as the industry's stable growth.
As in many other manufacturing sectors in Taiwan, China's massive pull will also impact the island's FPD industry, fully realizing the harsh realities of supply-and-demand to practically force all panel makers on the island to migrate westward to China, where demand is potentially astronomical and labor still relatively cheaper. Once Taiwan approves local FPD and parts makers to set up plants in China, one can expect to see further impact on industrial clustering and continual capital investment on the island.
The second quarter, a traditional off-season, will see gradually falling prices of both IT and TV panels, unless interrupted by a supply shortage of upstream materials and key parts.
| Production Values of Taiwan's FPD Sector Unit: NT$100 million | ||||||||
| Category | Q3., '09 | Q4., '09 | Q1., '10 | QoQ | YoY | Q2'10(e) | ||
| FPDs | Panels | TFT-LCDs (>10") | 2366.4 | 2286.5 | 2,208.8 | -3.4% | 85.1% | 2102.8 |
| TFT-LCDs (<10") | 449.8 | 399.0 | 339.0 | -15.0% | 20.3% | 403.4 | ||
| TN/STN LCDs | 62.8 | 70.0 | 54.6 | -22.0% | -27.7% | 51.5 | ||
| OLEDs | 18.7 | 19.3 | 19.7 | 2.1% | 7.6% | 19.5 | ||
| Others* | 1.1 | 1.2 | 1.1 | -10.8% | 7.0% | 1.2 | ||
| Sub-Total | 2898.7 | 276.0 | 2,623.2 | -5.5% | 67.1% | 2578.3 | ||
| Key Parts | Color Filters | 332.9 | 325.1 | 304.8 | -6.2% | 86.1% | 350.5 | |
| Polarizers | 108.2 | 116.2 | 128.9 | 10.9% | 45.5% | 131.5 | ||
| Substrates | 350.3 | 379.0 | 408.5 | 7.8% | 58.3% | 426.5 | ||
| Backlight Units | 313.8 | 325.1 | 363.4 | 11.8% | 76.8% | 465.5 | ||
| Sub-Total | 1105.2 | 1415.4 | 1,205.6 | 5.3% | 68.4% | 1374.0 | ||
| Overall | 4003.8 | 3921.4 | 3,828.8 | -2.4% | 67.5% | 3952.3 | ||
| Source: IEK-ITIS, May 2010. | ||||||||