The year of 2007 for LCD panel makers was a great year with most seeing record profits and sales during the period. ASPs (average selling prices) for end-products did not represent a significant drop as happened in 2006 and demand for small- to medium-size LCD panels experienced a surprising boom thanks to new applications such as handheld devices and digital photo frames as well as low-cost notebooks. For 2008, with the Beijing 2008 Olympics in August and the push by digital TV broadcasting, LCD TVs will continue seeing strong growth, many industry players predict.
Digitimes identifies the following ten trends for the LCD panel industry in 2008.
A healthy supply/demand situation throughout the year
Most major first-tier panel makers such as LG.Philips LCD, Samsung Electronics, AU Optronics (AUO) and Chi Mei Optoelectronics (CMO) show a positive outlook for the year.
Steady growth of the panel market is expected in 2008 with continuous solid business performance resulting from tight supply, according to Samsung. Worldwide large-size panel shipments are expected to hit 465 million units, up 20% sequentially. Stable panel pricing is expected to sustain due to tight supply, predicted the company.
Although some players saw demand for the first quarter weaken amid seasonality, AUO said it still enjoys strong demand from customers. For the full year of 2008, LJ Chen, president and COO, estimated that worldwide LCD panel supply will lag behind demand, adding that on-year demand growth may reach 28-30% while annual supply growth in 2008 is estimated at around 22-23%.
CMO foresees that industry-wide supply shortages will occur in the second half of 2008. First quarter sales are to be slow on seasonality, but will start to rise in the second quarter. 2008 will be a strong year for CMO, the company said.
In line with industry perspectives, research firms such as Displaybank and iSuppli also deliver an optimistic outlook. The LCD industry will likely see its greatest boom ever in 2008, Displaybank forecasts, adding that demand for large-size LCD panels is expected to increase 18% on year to roughly total 450 million units, equivalent to a square meter growth of 27% on year.
Worldwide LCD panel shipments forecast, 2006-2010 (m units) |
Application |
2006 |
2007 |
2008(f) |
2009(f) |
2010 (f) |
Monitor |
137.9 |
169.7 |
186.6 |
200.3 |
214.4 |
Notebook |
79 |
108.4 |
132.3 |
162.7 |
187.1 |
TV |
57.1 |
80.1 |
108.3 |
136.4 |
154.8 |
Others |
10.4 |
12.5 |
15.6 |
17.2 |
19.7 |
Total |
284.4 |
370.7 |
442.8 |
516.6 |
576 |
Source: Digitimes Research, compiled by Digitimes, January 2008
Large-size LCD panel demand forecasts for 2008 (m units) |
Application |
2007 |
2008 (f) |
Growth |
Monitor |
178.8 |
199.6 |
11.6% |
Notebook |
107.4 |
129.6 |
20.7% |
LCD TV |
81.7 |
105.6 |
29.3% |
Others |
11.6 |
12.9 |
11.2% |
Total |
379.5 |
447.7 |
18.0% |
Area (m2) |
50.5 |
64.3 |
27.2% |
Source: Displaybank, compiled by Digitimes, January 2008
Worldwide TFT LCD panel outlook, 2007-2008 |
Application |
2007 |
2008 |
Y/Y growth |
Monitors |
175 |
198 |
13% |
Notebook |
114 |
139 |
22% |
TVs |
86 |
112 |
30% |
Total |
388 |
465 |
20% |
Area (m2) |
54 |
70 |
29% |
Source: Samsung Electronics, compiled by Digitimes, January 2008
Taiwan-based panel makers to generate nearly NT$200 billion (US$6.2 billion) profits
LCD panel makers such as AUO and CMO reported record sales in 2007 and the two are expected to set another record in 2008 amid growing shipments and rising prices, according to industry estimates.
The sources indicated that AUO expects to grow annual profits of NT$80 billion in 2008, compared to NT$60 billion in 2007. Meanwhile, as CMO has a new 6G plant, and the second-stage of its 7.5G line to come on board this year, the company should see its shipments grow 25-30% sequentially, higher than the industry standard. Overseas investment analysts have estimated the company may post net profits of more than NT$50 billion, compared to NT$36 billion in 2007.
Of second-tier makers, Chunghwa Picture Tubes (CPT) and HannStar Display may enjoy annual profits of NT$20-25 billion and over NT$10 billion in 2008, respectively, market watchers estimate.
Large-size panel competition heating up
Demand for large-size LCD TV panels will continue heating up in 2008 with LCD poised to compete with PDP technology in 50- and 60-inch segments.
The Beijing Olympics will boost market share for full HD products. With retail prices for 40-inch and larger TVs to drop further, demand for the 40-inch class TV market will increase. According to iSuppli, 40/42-inch LCD TVs will be dominant by 2011.
For the notebook panel market, widescreen is definitely hot. According to Asustek Computer, in the first quarter of 2009, less than 1% of notebooks will feature a 4:3 aspect ratio.
Among widescreen notebook panel competition, apart from 16:10 products, the 16:9 widescreen panel market will see a rising share this year as more HD content comes available. 16:9 is more suitable for entertainment purposes, according to Tony Chen, COO of Asustek. Currently, 16:10 is currently the mainstream aspect ratio in the notebook market.
Samsung is planning to launch into the 16:9 16-inch widescreen segment while AUO and CMO are both developing 16:9 15.6-inch panels.
Widescreen will also be significant in the LCD monitor panel market. The market is shifting from 17-inch to 19-inch and above due to higher adoption of widescreen formats. The shipments proportion of 22-inch panels is expected to grow to 21% by 2011, compared to only 1% in 2006, iSuppli forecasts.
Widescreen will also become available in 15-inch or 16-inch monitors later in 2008 with AUO and CMO rolling out 15-inch widescreen and 15.6-inch widescreen monitor panels, respectively. China-based panel makers such as Shanghai SVA-NEC Liquid Crystal Displays (SVA-NEC) and BOE Optoelectronics Technology (BOE OT) are also opting for 15.6-inch widescreen (16:9) panels for their new monitor products.
CPT and AUO are reportedly to launch 18.5-inch widescreen monitor panels.
Small- to medium-size panel market lifted by new applications
Small- to medium-size LCD panel supply may experience another shortage in 2008 amid drivers in different markets such as digital photo frames, handsets, digital cameras, PNDs and low-cost notebooks.
Shipments for small- to medium size LCD panels are expected to surpass five billion units by 2011, compared to four billion units in 2007, according to iSuppli's latest forecast.
Benefiting from strong China white-box handset demand, Taiwan LCD panel makers saw their shipments of small- to medium-size panel shipments rebound starting from the beginning of 2007 prompting them to focus more on the sector. Gradually through to the end of last year, demand for small- to medium-size panels grew, lifted by the launches of Apple's iPhone and low-cost notebooks. Low-cost notebooks and photo frames consumed the 7-inch panel market, which was previously occupied by portable DVD players.
Taiwan-based LCD panel makers are also developing the touch panel segment in 2008. Innolux Display plans to ship capacitive touch panels starting in the first quarter of 2008 with monthly capacity to total 133,000 units, compared to 130,000 units in the fourth quarter of 2007.
Cando, an affiliate of AUO, announced in November it would invest NT$2-3 billion to build a 3.5G plant to support AUO's in-cell touch panel technology development. Mass production will commence in May 2008 with an initial monthly capacity of 5,000 units.
Small- to medium-size panel consolidation status, 1Q08 |
Panel maker |
LCM manufacturers |
Application |
AUO |
20-in-house |
Mobile, DSC, low-cost notebook |
CMO |
Chi Hsin Electronics (subsidiary), Tianma, Truly, BYD |
Mobile, 7- to 8-inch |
CPT |
Partnership with GiantPlus |
Mobile, 7-inch |
HannStar |
Sold two 3G plants to Wintek |
- |
Wintek |
In-house |
Mobile |
PVI |
Bought BOE-Hydis LCD plants |
7-inch, electrophoretic display (EPD) |
Innolux |
In-house |
Mobile, 7-inch |
LG.Philips LCD |
Chinese LCMs, SDI |
Mobile |
Samsung Electronics |
In-house |
Mobile, PND |
Seiko Epson |
In-house, might exit LCD business |
Mobile |
Sources: Companies and iSuppli, compiled by Digitimes, January 2008
LED-based BLU and low-cost products hot in the notebook market
The low-cost notebook market will continue rising strongly in 2008. Asustek plans to launch 8- and 9-inch version Eee PCs and aims at a shipments total of 4-5 million units.
Worldwide, low-cost notebooks may hit 10 million units in 2008 with Acer, Hewlett-Packard (HP), Gigabyte Technology, and Micro-Star International (MSI), among others, all planning to launch similar products.
The penetration rate of notebook panels adopting LED backlight technology will exceed 10% in 2008, David Su, senior vice president of AUO predicted in October of 2007. LCD backlight unit (BLU) maker Radiant Opto-Electronics hopes LED BLUs can account for 10% of its total notebook application products shipped in 2008, according to industry sources.
40-inch class TV market to gain significant share
Prices for LCD TV panels will drop 4%-11% sequentially in 2008, according to industry estimates.
For the 32-inch segment, prices are expected to fall to US$320 by the end of 2008, from US$332. ASPs for 37-inch TV panels will decrease 7% to US$410 by the end of the year, the sources noted.
If supply for 32-inch TV panels continues to run tight, LCD brand makers may not drop prices for the segment further due to profit concerns. Therefore, brand makers may opt to adjust 40-inch class TV prices to stimulate demand. With the prices for 40/42-inch TV panels to fall 11% sequentially in 2008, customers may be more willing to buy 40-inch class TVs.
OLED market on the rise
With Sony having realized OLED technology as a commercial product in the TV market in late December, more makers are showing interest in the OLED market.
Samsung Electronics showcased two (14.1-and 31-inch) OLED TVs at CES 2008 and the company stated it will begin commercial production of medium- to large-size OLED TVs around 2010.
Shipments of OLED TVs will rocket from 2,000 units in 2007 to 18,000 units in 2008, and will further shoot to 50,000 units in 2009 and 120,000 units in 2010, according to a Digitimes Research report published in late December.
There are also new comers for OLED panel market. In December, three Japan-based companies: Hitachi, Canon and Matsushita Electric Industrial announced they had decided to work together on OLED technology.
OLED is not only hot for the large-size market. More and more OLED panels are being adopted by the small- to medium-size handheld device market.
Some industry players predict that OLED technology will brighten the future of the TV, handset, monitor and lighting markets within five years.
LCD component makers to maintain close relations with panel makers
LCD equipment depreciation rates have fallen to 10% at present, compared to 20-30% in the past, while the production cost proportion for LCD component materials has increased to 70%.
In response panel makers are choosing to step into the upstream LCD component market to further reduce production costs.
While panel makers are working on vertical integration, pure LCD component makers will have to aggressively maintain their relationships with panel makers to survive.
Larger scale for first-tier and second-tier panel makers
First-tier LCD panel makers are scheduling next-generation LCD plants. Samsung is even discussing internally the feasibility of 11G lines which would focus on 70-inch panels, according to industry sources. Sharp held the ground breaking ceremony for its 10G plant on December 1, 2007 with the plant to kick off operations by March 2010. The main product of Sharp's 10G line will be LCD panels for large-screen LCD TVs in the 40- to 60-inch class.
First-tier players such as Samsung, LG.Philips LCD, AUO and CMO have all made progress on 8.5G lines. Samsung's 8-1 phase 2 ramp will start during the third quarter of 2008 with a monthly capacity of 60,000 substrates, stated the company in December.
LG.Philips LCD has guided a 2008 capital expenditure (capex) of approximately three trillion won (US$3.2 billion), to be utilized for the creation of 8G LCD facilities and production efficiency enhancement at existing facilities. The 8G line will enter volume production in the first half of 2009.
AUO and CMO both recently announced 8.5G plans. The two companies will see equipment move-in for the new plants by the end of 2008 with volume production set for the the second half of 2009, according to the companies.
Second-tier LCD specialists such as CPT and HannStar Display are changing their strategy and are not eyeing next-generation plants. Instead, they will focus on financial improvement and product mix.
CPT has not yet finalized its next-generation projects, and indicates that a final decision will be made by the end of 2008.
HannStar, which has struggled for the past few years, finally made a profit starting from the second quarter of 2007. The Taiwan-based panel maker also entered into a strategic alliance with LG.Philips LCD, seeking ways to differentiate from first-tier makers.
More TFT alliances between brand and panel makers?
In September 2007, CMO and TPV Technology announced a strategic alliance. The partnership is expected to help the two in terms of LCM deployment. CMO currently has an LCM base in Ningbo, China while TPV has said it will further expand its Ningbo factory to stay competitive. Other major panel makers are also developing relationships with brand or system makers, for example Qisda/AUO and Proview/CPT.
First-tier TV brands such as Samsung, Sony, Sharp, LG, and Panasonic all have their own panel plants while China TV brand makers, in contrast, do not maintain self production.
China will surpass Japan to become the third largest LCD TV market in the world in 2008, market sources estimate. The huge demand will further push China's local TV brand makers to seek more stable support from panel makers outside of China. To this point, there could be more potential alliances between China TV brand makers and panel makers expected this year.