Innolux Advances to No. 2 Spot in Notebook PC-panel Market in Q2, 2014

Global shipments of large-sized (larger than 10-inch) thin film transistor-liquid crystal display (TFT-LCD) panels in July dropped 5% month-on-month (MoM) to 68.21 million units, according to WitsView Technology Corp., an LCD market research firm.

Innolux Display Corp., the largest TFT-LCD maker in Taiwan, captured a 27% global share of the segment in July, replacing Korean rival LGD to become the world's largest supplier of notebook PC panels.

Worldwide shipments of LCD TV panels declined 0.4% MoM in the month to reach 20.86 million units, WitsView said, while monitor shipments dropped 5.6% MoM to 12.72 million. Some 15.32 million notebook PC panels were delivered in July, down 5.8% MoM. Because Apple adjusted its product inventory for the scheduled launch of its 9.7-inch new iPad model in the second half, global tablet PC panel shipments fell 8.4% MoM in July to 15.32 million units.

Chen Jian-an, senior research manager at WitsView, said that August's global large-sized TFT-LCD shipments are expected to stay at the same level as the previous month. However, the TV panel sizes will continue to grow with total volume basically unchanged, while monitor panels will slip by 1% to 2% due to weaker demand as handheld devices gain in popularity. Notebook PC panel shipments are expected to hold steady, while tablet panel demand is anticipated to dip 1% MoM in August, Chen added.

As Samsung of South Korea is striving to compete with Apple for the No. 1 position in the tablet segment, Chen said, the Korean company has been increasing the production ratio of tablet panels while lowering that of notebook PC panels. LGD is upgrading its production ratios of smartphone and industrial-computer panels. Chen predicted that the trend would drive notebook PC-panel orders to Taiwanese suppliers.

Innolux is expected to be the biggest beneficiary of the expected order shifts, WitsView said. The firm is producing 12-inch notebook PC panels at its 5.5th-generation (5.5G) factory, giving it greater flexibility in panel prices and shipment volumes.

Record Total Shipment Area in Q2

Display market researcher NPD DisplaySearch recently reported that total shipments of large-sized TFT-LCD panels reached a record high of 37.7 million square-meters in the second quarter of 2014, driven by the shift to larger sizes in all applications.

Shipments of 9.1-inch and larger TFT-LCD panels rose 3% year-on-year (YoY) to 181 million units, in the second quarter. TFT-LCD unit growth was led by LCD TV panel shipments, which reached a record high of 64 million units, NPD DisplaySearch said. The large-sized TFT panels covered in the company's statistics include a-Si TFT-LCD, oxide TFT-LCD, and active matrix organic light-emit diode (AMOLED) panels.

"Panel makers are now taking the opportunity to boost their capacity utilization, clean out their panel inventories, and complete shifts in the product mix," said Peter Su, large-area display analyst for NPD DisplaySearch. "Although panel shipments and prices both rose in the second quarter, supply and demand will gradually come into balance."

The display panel manufacturer market share rankings shifted in the second quarter. LGD maintained its lead with 25% of units shipped, but for the first time Taiwan's Innolux surpassed Korean rival Samsung, while AU Optronics Corp. (AUO), the second-largest TFT-LCD maker in Taiwan, ranked fourth, followed by BOE of China. However, on a shipment area basis, LGD ranked first in the second quarter (25%), followed by Samsung (22%), Innolux (19%), AUO (15%), and Sharp of Japan (6%).

According to panel makers' future business plans, nearly all TFT-LCD applications are expected to experience a quarter-on-quarter (QoQ) decline in the third quarter, excluding the 9-inch and larger tablet-PC panel and public display panel segments. Due to increased demand for larger tablet PCs from consumers and aggressive marketing efforts of tablet PC brands, shipments of large-sized AMOLED panels for tablet PCs will grow substantially in the third quarter, passing one million.

NPD DisplaySerach forecasts that the overall TFT-LCD market will experience a 3% QoQ decrease, as manufacturers plan to ship just 174.6 million TFT-LCD panels in the third quarter. "With many TV brands beginning to see their inventories pile up, panel manufacturers are being careful not to overload the pipeline," Su noted.

Fabrication loading rates are also expected to be lower in Q3 than in Q2. However, as pipeline shortages disappear, the most critical job that panel makers have is to prevent panel prices from falling. "In the third quarter, demand will decline gradually and come into balance with supply, and fab loadings will be adjusted downward,” Su indicated. “Even so, the risk of the panel inventory adjustments in the fourth quarter cannot be ignored."