The production value of Taiwan`s flat panel display (FPD) industry for the first quarter of 2008 was NT$480.19 billion (US$15.74 billion at NT$30.5:US$1), a 10.1% decrease from the fourth quarter of 2007, according to statistics released by a government-sponsored research center under the Industrial Technology Research Institute (ITRI).
FPD production value fell 11.5% in Taiwan in the first quarter, a traditionally low-demand period. (photo from AUO`s press center)
The figures, provided by the Industrial Economics & Knowledge Center (IEK) of ITRI`s Industry & Technology Intelligence Services (ITIS), indicate that flat-panel displays (FPDs) made up NT$352.6 billion (US$11.56 billion) of the total, down 11.5% quarter-on-quarter (QoQ), while key parts and components contributed NT$127.57 billion (US$4.18 billion), falling 6.1% QoQ).
Large-sized (10-inch-plus) thin film transistor-liquid crystal displays (TFT-LCDs), small and medium-sized TFT-LCD, and TN/super twisted nematic (STN) LCDs respectively contributed NT$293.65 billion (US$9.63 billion), NT$42.9 billion (US$1.41 billion), and NT$14.3 billion (US$468.85 million), to the total production value. In the parts category, the top items by production value were color filters (NT$38 billion or US$1.25 billion), polarizers (NT$17.75 billion or US$581.97 million), glass substrates (NT$33.9 billion or US$1.11 billion), and backlight modules (NT$37.92 billion or US$1.24 billion).
According to IEK-ITIS, large-sized TFT-LCD panels dropped marginally in price in the first quarter, which is traditionally a low demand season compared with the peak fourth quarter. The Chinese New Year break in February also drove down revenue for the quarter, which ended about 12% off the level of the fourth quarter last year.
Production of small and medium-sized TFT-LCD panels fell by 5% in the first quarter compared to the quarter before. Snow storms in mainland China and the Chinese New Year holidays are believed to have contributed to slackening demand.
The production value of organic light-emitting-diode (OLED) panels for the first quarter drooped by 10.4% from the fourth quarter of 2007 due to low demand in the off-season.
Most companies also saw a drop in revenue from TN/STN panels in the first quarter, with sales down 4% from the quarter before. Giantplus Technology Co. was the only one to buck the trend, racking up 44% sequential revenue growth in the first quarter. One major factor in the company`s strong performance is a strategic alliance with local TFT-LCD partner Chunghwa Picture Tubes, Ltd. (CPT), which gives Giantplus tighter control of upstream panel supply.
Key Parts
For key parts related to FPDs, IEK-ITIS points out that due to falling demand by downstream panel makers, most major makers of color filters in Taiwan performed poorly in the first quarter. Overall, production value in the segment dropped 11% from the previous quarter.
The first-quarter production value of polarizers fell 5.5% from the previous quarter. IEK-ITIS says that the lower demand from downstream panel makers and the upgrading ratio of panel suppliers` in-house polarizer production affected polarizer makers` revenue performance.
Supply of glass substrates tightened from the third quarter of 2007, helping keep unit prices stable. The demand from both downstream makers of large- and small/medium-sized panels also held firm in the first quarter, with the result that average selling prices (ASP) and shipments of drove glass-substrate gained 2% in the first quarter.
The picture was bleaker in the backlight-module segment, as falling demand from panel makers drove production value down 5.6% in the first quarter from the quarter before.
Reshuffling
Some major moves by FPD and key-parts manufacturers in the first quarter are expected to change the FPD market ecology.
In February 2008, Sony announced that it would invest 200 billion Japanese yen in Sharp`s new 10th-generation (10G) TFT-LCD plant, which will kick off mass production as soon as in 2009. In 2007, Sony procured about 67% of its LCD TV panels from S-LCD Corp., a 50-50 joint venture established in 2004 between Samsung Electronics of South Korea and Sony that makes amorphous TFT-LCD panels for LCD TVs. The remaining 32% was from Taiwan`s AU Optronics Corp. (AUO), the largest TFT-LCD panel manufacturer on the island.
Soon after announcing its partnership with Sharp, Sony reported that it planned to pour an additional 200 billion Japanese yen into S-LCD to set up a second 8G production line with a monthly capacity of 50,000 substrates at the joint venture. The new 8G line is scheduled to begin mass production in the first half of 2009. The new line along with the 10G line are expected to give Sony an ample supply of 52-inch TV panels in the near future, potentially dampening the Japanese company`s appetite for Taiwan-sourced panels.
In the first quarter, Taiwan`s Chi Mei Group announced it would invest NT$1 billion (US$32.79 million) into Chi Mei EL Corporation (CMEL) to set up a second OLED production line. The new line is slated to begin mass production in the second half of this year. Orders began to outstrip CMEL`s production capacity in December 2007.
Toppan CFI (Taiwan) Co., Ltd., a color-filter maker 49% owned by AUO, announced in the first quarter that it would invest NT$3.8 billion (US$124.59 million) to construct a second color-filter plant in Taiwan. IEK-ITIS predicts that the new facility will help to balance supply and demand for 5G TFT-LCD color filters in Taiwan by 2009.
Local backlight module (BLU) makers took some comfort in the first quarter, when Korean rival Wooyoung Co., Ltd., a BLU supplier, announced it might withdraw from the market. Industry insiders predicted that Wooyoung`s orders would start to shift to suppliers in Taiwan in the second quarter, positioning Taiwanese BLU producers to further expand their global market share.
The Taiwan Flat Panel Display Materials and Devices Association (TDMDA ) teamed up with eight BLU makers in Taiwan to launch the "Next-generation LED BLU & Composite Optical Material Technology" development project. The project, which has won a subsidy from the MOEA, is expected to help the FPD industry in Taiwan to integrate major LED, optical-film, BLU, and system makers to accelerate development of the LED BLU sector.
Q2 Forecasts
Taiwan`s FPD line continues to face some challenges in the second quarter, IEK-ITIS says, among them the sluggish U.S. economy, stronger NT dollar, and rising fuel and material prices.
IEK-ITIS forecasts that in the second quarter the total production value of Taiwan`s FPD industry will reach NT$461.82 billion (US$15.14 billion), down 3.8 from the first quarter, including NT$335.01 billion (US$10.98 billion, down 5% from previous quarter) generated by FPD panel and NT$126.81 billion (US$4.16 billion) by parts (down 0.6%).
The center also predicts that in the FPD panel production value, large-sized TFT-LCDs will contribute NT$273.1 billion (US$8.96 billion) to the second quarter total. Small- and medium-sized TFT-LCDs will add NT$46.42 billion (US$1.52 billion); TN/STN panels NT$13.6 billion (US$445.9 million); and OLED panels about NT$1.76 billion (US$57.7 million).
In the FPD parts sector, the production value of color filters is expected to reach NT$36.1 billion (US$1.18 billion) in the second quarter. Polarizers will bring in about NT$16.77 billion (US$549.84 million), glass substrates about NT$32.88 billion (US$1.08 billion), and backlight modules about NT$41.06 billion (US$1.35 billion).
In the second quarter, according to IEK-ITIS, the prices of large-sized computer display panels are expected to stabilize after a downward trend appeared in March. TV panel prices, on the other hand, are expected to fall at a pace of about US$1 to US$2 (for mainstream 32- and 37-inch models) per month to an unknown bottom line.
Falling TV-panel prices, the appreciation of the New Taiwan dollar, higher material costs and other factors will together affect business in the large-sized panel segment, IEK-ITIS predicts.
IEK-ITIS also forecasts that the small- and medium-sized TFT-LCD panel makers would redouble efforts to upgrade production efficiency at their 4G and 5G facilities in the second quarter. On the demand side, small/medium-sized panels are expected to gain momentum in the cellphone and low-price notebook PC application markets.
Taiwan`s FPD Production Value Unit: NT$100 million |
| | Category | Q4, `07 | 2007 | Q1, `08 | 2008(e) |
| | | Revenue | Q/Q | Revenue | Y/Y | Revenue | Q/Q | Revenue | Y/Y |
FPDs | Panels | TFT-LCD (>10") | 3,360.3 | 7.5% | 10,870.3 | 42.0% | 2,936.5 | -12.6% | 13,700.0 | 26.0% |
| | | TFT-LCD (<10") | 452.8 | 32.4% | 1,271.2 | 69.3% | 429.0 | -5.3% | 1,560.0 | 22.7% |
| | | TN/STN LCD | 149.4 | -6.0% | 637.4 | -3.6% | 143.0 | -4.3% | 575.0 | -9.8% |
| | | OLED | 18.2 | 2.2% | 63.4 | 46.8% | 16.3 | -10.4% | 60.0 | -5.4% |
| | | Others* | 1.6 | -15.8% | 6.7 | 1.5% | 1.4 | -12.5% | 18.0 | 168.7% |
| | | Sub-Total | 3,982.3 | 9.2% | 12,849.0 | 41.0% | 3,526.2 | -11.5% | 15,913.0 | 23.8% |
| | Key Parts | Color Filters | 427.0 | 13.8% | 1,323.4 | 43.3% | 380.0 | -11.0% | 1,580.0 | 19.4% |
| | | Polarizers | 198.1 | 10.8% | 685.7 | 13.8% | 177.5 | -10.4% | 810.0 | 18.1% |
| | | Substrates | 332.3 | 12.9% | 1,142.1 | 42.5% | 339.0 | 2.0% | 1,380.0 | 20.8% |
| | | Backlight Units | 401.7 | -1.5% | 1,501.0 | 17.5% | 379.2 | -5.6% | 1,771.8 | 18.0% |
| | | Sub-Total | 1,359.2 | 8.2% | 4,652.2 | 29.1% | 1275.7 | -6.1% | 5,541.8 | 19.1% |
Total | 5,341.5 | 8.9% | 17,501.2 | 37.6% | 4,801.9 | -10.1% | 21,454.8 | 22.6% |
* Plasma display panels (PDPs), micro-displays, vacuum fluorescent displays (VFDs) etc. Source: ITIS |
(by Quincy Liang)
