DIGITIMES Research: FPD Report –4Q 2007
Taiwan small- to
mid-size LCD panels
Introduction 2
Chart 1: Small-to-medium-size TFT LCD panel shipments, 4Q06-1Q08 (thousand units) 2
Breakdown by application 2
Chart 2: Shipments by application, 4Q06-1Q08 (thousand units) 3
Chart 3 Shipment share by application, 4Q06-1Q08 3
Product breakdown by technology 4
Chart 4: Overall TFT LCD shipment share by technology, 4Q06-1Q08 4
Chart 5: Handset-use TFT LCD shipment share by technology, 4Q06-1Q08 4
Chart 6: DSC-use TFT LCD shipment share by technology, 4Q06-1Q08 5
Chart 7: Shipments by maker, 4Q06-1Q08 5
Industry watch 6
Handset applications for international vendors 6
China white-box handsets 6
Digital photo frames 7
Panel makers’ expansion and reshuffled relations 7
1Q seasonality not strong 7
Outlook till 2010 8
Chart 8: Taiwan small-to-medium-size TFT LCD shipments and global market share, 2005-2010
(thousand units) 8
Original Chinese: Jason Yang, DIGITIMES Research, January 2008
English edition: Rodney Chan, DIGITIMES, March 2008
NOTE: Unless otherwise indicated, figures and tables refer to output from Taiwan makers.
2
DIGITIMES Research: FPD Report –4Q 2007
Introduction
Shipments of small- to medium-size panels were strong in the fourth quarter, as a result of the
delivery fulfillment of orders that had been delayed by tight capacity in third quarter.
Shipments of handset applications were particularly strong. Applications for portable DVD
players were the only segment that saw shipments decline sequentially (19.6%) in the fourth
quarter.
Demand remains strong in the traditional first-quarter low season. Increases in shipments for
digital photo frame applications from Wintek, HannStar Display and Chi Hsin Electronics
cancelled out part of the decreases in orders from international vendors for handset and
digital still camera (DSC) applications. Overall shipments for the first quarter will only drop
slightly.
80% 100% 120% 140%
Chart 1: Small-to-medium-size TFT LCD panel shipments, 4Q06-1Q08 (thousand units)
160,000
140,000
120,000
60%
40%
60,000
20%
40,000
20,000
-20%
80,000
0%
100,000
4Q06
1Q07
2Q07
3Q07
4Q07(e)
1Q08(f)
Shipments
72,832
69,325
92,240
139,504
151,979
149,391
Q/Q
19.9%
-4.8%
33.1%
51.2%
8.9%
-1.7%
Y/Y
113.0%
62.3%
82.5%
129.7%
108.7%
115.5%
0
Source: Digitimes Research, January 2008
Breakdown by application
In the fourth quarter, handset application shipments continued to stay at a high level.
Shipments of digital photo frame applications rose steadily. Taiwan panel makers have
succeeded in entering the supply chain of such high-end MP3 players as the iPod nano and
iPod touch. Panel shipments for China white-box MP3 players and low-cost notebooks were
also increasing in the fourth quarter.
While shipments to the handset segment will decline in the first quarter because of
seasonality, shipments to the digital photo frame segment will rise still, attesting to the
growing popularity of the application.
Taiwan small- to mid-size LCD panels: Introduction
3
Chart 2: Shipments by application, 4Q06-1Q08 (thousand units)
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
4Q06
1Q07
2Q07
3Q07
4Q07(e)
1Q08(f)
Handset
35,949
37,595
50,210
83,295
93,372
91,445
DSC
11,915
9,738
11,792
15,791
16,099
14,888
Car-use display
9,303
8,485
9,743
11,930
12,281
11,689
Portable DVD player
6,107
4,581
6,930
9,133
7,340
7,838
Digital photo frame
1,939
1,198
3,720
5,348
5,653
6,431
Other
7,619
7,728
9,845
14,007
17,235
17,100
Note: The category “Other” includes MP3 players, low-cost notebooks, PDAs, digital camcorders, games consoles, and industrial PCs.
Source: Digitimes Research, January 2008
Handset applications’ share topped 60% in the fourth quarter, and will remain at a similar
level in the first quarter of 2008, despite a slight drop in shipments.
Chart 3 Shipment share by application, 4Q06-1Q08
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
4Q06
1Q07
2Q07
3Q07
4Q07(e)
1Q08(f)
Other
10.5%
11.1%
10.7%
10.0%
11.3%
11.4%
Digital Photo frame
2.7%
1.7%
4.0%
3.8%
3.7%
4.3%
Portable DVD player
8.4%
6.6%
7.5%
6.5%
4.8%
5.2%
Car-use display
12.8%
12.2%
10.6%
8.6%
8.1%
7.8%
DSC
16.4%
14.0%
12.8%
11.3%
10.6%
10.0%
Handset
49.4%
54.2%
54.4%
59.7%
61.4%
61.2%
Source: Digitimes Research, January 2008
4
DIGITIMES Research: FPD Report –4Q 2007
Product breakdown by technology
As shipments catering to international handset vendors’ high-end models remained strong in
the fourth quarter, the proportion of the LTPS segment went up slightly. In the first quarter,
the LTPS segment’s share will go down because of a decline in orders from international
handset vendors. In turn the a-Si segment’s share will go up, as shipments of entry-level
handset-use TFT LCD panels from Wintek and Giantplus Technology will increase.
Chart 4: Overall TFT LCD shipment share by technology, 4Q06-1Q08
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
4Q06
1Q07
2Q07
3Q07
4Q07(e)
1Q08(f)
a-Si
64.0%
65.9%
68.5%
65.4%
63.8%
66.3%
LTPS
36.0%
34.1%
31.5%
34.6%
36.2%
33.7%
Source: Digitimes Research, January 2008
Strong demand for high-end handset applications from international vendors boosted the
share of the LTPS segment in the fourth quarter. In the first quarter, handset application
shipments to the a-Si segment will rise as a result of Wintek’s and Giantplus’ increased
shipments of entry-level handset-use applications, while shipments to the LTPS segment will
drop on decreased orders from international handset vendors.
Chart 5: Handset-use TFT LCD shipment share by technology, 4Q06-1Q08
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
4Q06
1Q07
2Q07
3Q07
4Q07(e)
1Q08(f)
a-Si
55.8%
61.0%
62.7%
59.8%
58.1%
60.9%
LTPS
44.2%
39.0%
37.3%
40.2%
41.9%
39.1%
Source: Digitimes Research, January 2008
Taiwan small- to mid-size LCD panels: Introduction
5
Low-end applications for digital cameras have been phasing out fast, as the proportion of the
LTPS segment continued rising in the fourth quarter. But in the first quarter, orders belonging
to the a-Si segment are declining at a slower pace than the LTPS segment, and therefore the
a-Si segment will see a slight rise in shipment proportion.
Chart 6: DSC-use TFT LCD shipment share by technology, 4Q06-1Q08
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08(f)
a-Si
27.5%
27.0%
26.8%
24.2%
21.0%
21.6%
LTPS
72.5%
73.0%
73.2%
75.8%
79.0%
78.4%
Source: Digitimes Research, January 2008
The Top-2 makers, AU Optronics (AUO) and TPO Displays saw their combined share rise in
the fourth quarter, as their shipments to international handset vendors were strong.
In the first quarter, increased output from Wintek and Giantplus as a result of their acquisition
of 3G lines from HannStar Display and Chunghwa Picture Tubes (CPT) respectively is
expected to bite into the Top-2 makers’ share.
Chart 7: Shipments by maker, 4Q06-1Q08
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
4Q06
1Q07
2Q07
3Q07
4Q07(e)
1Q08(f)
Others
35.5%
38.9%
40.3%
40.1%
37.9%
41.6%
Top-2
64.5%
61.1%
59.7%
59.9%
62.1%
58.4%
Note: The Top-2 makers are AUO and TPO, while the other makers are Wintek, Innolux, CPT, Giantplus, HannStar, PVI, and Chi Hsin.
Source: Digitimes Research, January 2008
6
DIGITIMES Research: FPD Report –4Q 2007
Industry watch
Three major factors drove Taiwan’s small- to medium-size LCD panel shipments up almost
100% last year. First, Taiwan makers started playing a major role in the supply chain for
international vendors of DSC and handsets. Previously, Taiwan makers had played second
fiddle to Japanese competitors. Second, demand from China’s white-box handset was strong,
and third, the popularity of digital photo frames was growing.
Handset applications for international vendors
Handset applications have usually accounted for about 70% of the global small-size panel
shipments, or 60% of the total small- to medium-size panel shipments. Prior to 2005,
entry-level to mid-range handsets mainly used STN LCD panels, while high-end handset
applications were dominated by Japanese suppliers. Starting in 2006, Taiwan makers were
starting to make technological breakthroughs. They were also beginning to use their 3G and
4G plants to make handset panels, reducing the production costs for entry-level a-Si TFT LCD
panels to ranges close to that seen for STN panels. It triggered a wave of adoption of TFT LCD
panels for use in entry-level handsets. Growing demand for multimedia functionalities also
prompted makers to adopt LTPS TFT LCDs for mid-range handsets. Taiwan panel makers were
in a strong position to step up their contention for the handset-use TFT LCD market with their
Japanese competitors. As a result, Taiwan makers’ shipments to international handset
vendors started to grow significantly in the third quarter of 2007.
In 2007, Motorola’s performance was poor, while Nokia’s sales were stronger than expected.
Their performances affected their panel suppliers in Japan, who adopted an “ad hoc”
production policy that reserved production lines for specific clients. As a result, utilization of
the “ad hoc” lines for Motorola was low, while their other production lines were unable to
cater to strong demand from Nokia, which had to turn to Taiwan for support. Wintek, already
a supplier of Nokia, and TPO Displays, benefited most from Nokia’s increased orders. In 2006,
52%, or 54 million panels, of Taiwan’s handset panel shipments were shipped to international
vendors, but in 2007, the proportion rose to 66%, or 170 million units.
China white-box handsets
China’s white-box handsets were previously seen as offering a market for low-cost and
low-quality products. But the fast declining prices for TFT LCD panels, plus Taiwan makers’
handset-use LCD module (LCM) deployment in China, accelerated the adoption of TFT LCDs
for China’s white-box handsets.
White-box handset suppliers in China tend to imitate the looks and feels of the brand-name
vendors’ best-selling and quality models, such as Apple’s iPhone, Nokia’s 6111i, and the LG
Chocolate. The white-box models adopt 2.4-inch or larger panels, or even touch panels and
sell for less than half the prices of the ones they imitate. These white-box vendors have
become a strong source of orders for Taiwan’s panel makers. Almost all of the TFT LCD panels
for the China white-box handset market are supplied by Taiwan makers. In 2007, the TFT LCD
panel shipments from Taiwan makers and their competitors to the China white-box handset
market totaled 78 million units.
Taiwan small- to mid-size LCD panels: Industry watch
7
Digital photo frames
The growing popularity of digital photo frames has also boosted the shipments of
medium-size TFT panels. When Philips made a head-start in launching digital photo frames in
2005, they were meant to be niche products with an annual shipment of a few dozen
thousands. But medium-size TFT LCD prices began to fall fast in 2006 when Taiwan makers
started making them at their 4.5G lines in 2006. The decline in prices means that makers who
did not have 4.5G lines would hardly make profits if they continued to have a strong presence
in the digital photo frame market. As these makers shifted their focus to higher added-value
applications, such as car-use displays and industrial PCs, supply of digital photo frame-use
panels decreased. At the same time the prices for digital photo frames on the end market were
falling, and in turn boosted demand. Entry-level 7-inch TFT LCD panels for digital photo
frames were then running short, and the shortages in turn sent their prices up in 2007. In the
second half of 2007, Korea’s LG.Philips LCD (LPL, now renamed LG Displays) and Taiwan’s
Innolux Display also started using their 5G lines to process medium-size panels in order to
meet the strong demand from the digital photo market.
Panel makers’ expansion and reshuffled relations
In 2007, the LCD panel industry saw many of its players forge tighter ties or take other
measures in anticipation of strong demand for the small- to medium-size segment in 2008.
CPT decided to sell a 3G line to LCD module (LCM) maker Giantplus Technology and to form
a strategic alliance - CPT is now Giantplus' biggest shareholder. Wintek also agreed to acquire
HannStar’s second 3G line. CMO established Chi Hsin Electronics to develop the small- to
medium-size LCM market. These developments are positive for Taiwan’s small- to
medium-size LCD panel industry.
Before CPT and Giantplus stuck the partnership, CPT’s medium-size panel production chiefly
came from its 4G and 4.5G plants, plus an estimated 10-15% of capacity from its 3G line. The
3G plant that CPT has sold Giantplus will be entirely used to process small-size panels. A 3G
substrate will produce 8-10 times more small-size panels than medium-size ones. In the first
quarter of 2008, CPT is shifting the focus of its 4.5G plant to the medium-size segment, and
therefore still needs Giantplus’ support for the small-size segment. About 20% of Giantplus’
3G plant is devoted to supplying CPT.
Wintek is ramping up production at its second 3G plant, which it has just taken over from
HannStar. In the past, Wintek had only one 3G plant, which was also acquired from HannStar.
Limited capacity had prevented Wintek from expanding its product range to meet clients’
needs. The addition of the second 3G line will enable it to expand its range of applications,
such as digital photo frames.
HannStar, which has only one LCD panel plant (what it calls a 5.3G line) left, is also gearing
up for the digital photo frame market. The 5.3G line is 20-30% more efficient that an ordinary
5G line. The medium-size segment currently accounts for 10% of the plant’s capacity.
Chi Hsin, a subsidiary of CMO, currently mainly ships medium-size TF LCD panels. Its
first-quarter shipments are expected to reach 2-3 million units. Its share remains low.
1Q seasonality not strong
The seasonal downturn in the first quarter has not been strong. Dispelling previous
speculations that the small- to medium-size panel market would see price declines, demand
has turned out to be strong enough to keep prices stable. The growing popularity of low-cost
notebooks, such as Asustek’s Eee PC, is one of the price stabilizing factors. While low-cost
notebooks and entry-level digital photo frames both adopt 7-inch panels, the panel prices for
the former applications are 20-30% higher than the latter.
The first-quarter seasonality has been more tangible for the small-size segment. Decreases in
shipments of high-end LTPS applications due to reduced demand from major international
clients have been deeper than the a-Si TFT LCD segment. But the small-size segment will see
demand pick up in the second quarter.
8
DIGITIMES Research: FPD Report –4Q 2007
Outlook till 2010
Taiwan’s shipments and global market share will continue rising through 2010, as orders from
white-box handset vendors will show particularly strong growth. But not much new capacity
is expected to be added, so shipment growth will start slowing down significantly this year.
80% 100% 120%
Chart 8: Taiwan small-to-medium-size TFT LCD shipments and global market share,
2005-2010 (thousand units)
900,000
800,000
700,000
600,000
60%
500,000
40%
400,000
300,000
0%
20%
200,000
100,000
2005
2006
2007(e)
2008(f)
2009(f)
2010(f)
Shipments
106,041
226,828
453,047
596,003
688,038
797,363
Y/Y growth
106.5%
113.9%
99.7%
31.6%
15.4%
15.9%
Global share
15.6%
25.2%
37.8%
43.2%
43.5%
45.6%
Source: Digitimes Research, January 2008
0