Global Investments in TFT Panel Making Equipment Estimated to Hit Nadir of US$13 B. in 2011

Taiwan, Feb. 22, 2012 (CENS)--Affected by sluggish market demand for display panels, global investments by enterprises in purchasing new TFT (thin film transistor) display panel making equipment are estimated by market observers to hit a nadir of around US$13 billion in 2011.

In response to the shrinkage in market demand for display panels, most of global manufacturers in the line, especially those having suffered operating losses for consecutive quarters, had sharply cut capital spending and suspended output expansion , causing global investments in new display panel making equipment to drop in 2011.

For instance, the Taiwan-based AU Optronics Corp. cut its capital spending twice to only NT$57 billion for 2011, while Chimei Innolux Corp. also budgeted less than NT$50 billion for output expansion. Fretted by sagging market demand, both Taiwanese companies are expected to keep cutting their investments in new equipment in 2012.

While huge operating losses have forced Taiwanese makers to cut capital expenditure, Korea's major display panel makers, however, have tended to maintain theirs at the normal level this year. For example, LG Display has announced its capital expenditure of KRW4 trillion (about NT$100 billion at KRW1: NT$0.025) for the year, which will be mainly spent on upgrading existing equipment and setting up 8th-generation production lines for OLED (organic light emitting diode)-based panels. Meanwhile, Samsung Electronics, which has planned to expand output of its OLED panels, will raise its planned capital budget to KRW8 trillion for 2012 from KRW5.9 trillion spent a year ago.

DisplaySearch, a global monitor market researcher, noted that manufacturers' spending on new equipment will continue to drop 63% yearly in 2012, but is likely to rebound a year later, mainly because market demand for 50-inch and larger-sized display panels, following continuous price drops, may start to grow in 2013, which will help to better balance supply and demand and then to drive manufacturers' willingness to expand output.