The Future is Bright for TFT-LCD Manufacturers and Materials/Equipment Suppliers


Bookmark and Share

The Future is Bright for TFT-LCD Manufacturers and Materials/Equipment Suppliers

By Ross Young, chief research officer, DisplaySearch

In 2007, the flat panel display industry reached the $101 billion mark, which is expected to grow to $130.5 billion by 2012. There are many display-centric applications on the rise, such as notebooks, mobile applications, digital photo frames, home appliances and navigation systems and flat panel HDTVs, providing opportunities for TFT-LCD manufacturers and, ultimately, equipment and material suppliers.

According to DisplaySearch’s “Quarterly TFT LCD Supply/Demand and Capital Spending Report,” the firm expects that sales of equipment used to manufacture TFT-LCDs will surge 40% to more than $11.6 billion in 2008, and will likely remain at a similar level through 2009. 2007 turned out to be an excellent year for TFT- LCD panel makers. Unfortunately, it was a very challenging year for equipment companies, who generated only $8.3 billion in revenues, down 35% from 2006 levels. These dynamics of reduced investment and healthy panel maker earnings, coupled with continued strong demand, are now setting up 2008 to be a bumper year for almost all segments of the LCD industry and a reversal of fortune for equipment companies.

New investments in 2008 and 2009 will increase capacity, help keep prices on a declining curve, and likely push demand further than even previously expected. However, the entire TFT-LCD supply chain needs to be careful. If all panel makers rush to dramatically increase capacity in the next two years, the industry could once again set itself up for a significant over-supply, causing a repeat of the crystal cycle in 2010.

Additional highlights from the DisplaySearch “Q4 2007 Quarterly Supply/Demand and Capital Spending Report” include:

  • Compared to the previous estimates, new investments and capacity expansions have been increased and pulled in, so now 46 individual fab investments are forecast between the start of Q3 2007 to the end of Q3 2010, eight of which will be for new LTPS lines, conversions of a-Si to p-Si or expansions of current capacity.
  • Counting a new IPS Alpha fab, AMLCD TFT array capacity is expected to rise at a compound annual growth rate of 34% from 4.5 million m2 in 2000 to over 209 million m2 in 2013. Color Filter capacity is on a similar growth curve, expanding from 5.3 million m2 in 2000 to over 216 million m2 in 2013.
  • Multiple older PDP lines are being shut down as more productive lines come on stream, especially those not able to meet 1080p precision requirements. Even despite the recently announced Matsushita, Hitachi and Canon alliance, Matsushita is still expected to forge ahead and build a 12-up, 42” equivalent PDP mega fab that should focus on 50” and larger TV production.
  • The top five LCD makers—Samsung, AUO, LPL, CMO and Sharp—are forecast to continue to invest at the highest rates increasing their total share of capacity from 79.6% in Q3 2007 to 82.9% in Q3 2009.
  • In terms of TFT-LCD capacity, supply/demand was extremely tight from Q2–Q4 2007. Supply/Demand is now closely linked to seasonality, and is expected to be looser in Q1 2008; but, then grow tight through the end of the year, helping to keep panel pricing firm. Based on the current outlook, 2009 and 2010 supply/demand should grow progressively looser.
  • Supply/Demand of key components such as CCFLs, glass substrates, CF, TAC film and PVA film also affect panel makers’ ability to utilize capacity. In Q3 2007 and Q4 2007, color filters and glass substrates were in shortage, restricting the amount of panels that could be produced. Key component supply will remain a gating factor for panel production in 2008 and then should loosen in 2009.
  • TFT fab utilization as an industry average continuously increased from a very low 85.4% in Q1 2007 to a very high 95.7% in Q3/Q4 2007, which is the highest level recorded since DisplaySearch started tracking this segment in 2000.
  • As shown in Table 1 below, with Gen 10, lots of Gen 8 and other expansions, including a second IPS Alpha fab, going forward TFT equipment makers should see significantly higher revenues than 2007.

Table 1: TFT Equipment Maker Revenue

Year

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Revenues

$3.6

$6.7

$3.8

$5.2

$6.3

$13.3

$10.5

$12.7

$8.3

$11.6

$11.3

$10.5

$9.6

Growth

0%

85%

-43%

36%

22%

109%

-21%

22%

-35%

40%

-3%

-8%

-8%

  • TFT-LCD makers achieved pre-tax profit margins of 17% on average in Q3 2007, the best performance since Q2 2004 and exceeding the prior peak. Large area TFT-LCD panel margins are forecast to be even higher in Q4 2007 and push into the 20% level during 2008. Most industry participants are quite optimistic about 2008.

U.S. FPD Conference

At its 10th Annual U.S. FPD Conference, DisplaySearch will feature a session on “FPD Materials & Equipment Outlook.” DisplaySearch will analyze FPD fab activity and manufacturing technology, as well as forecast key equipment and materials market segments. Executives from leading materials vendors will discuss how their companies are enhancing FPD value, while overcoming the challenges of lowering costs and growing demand. Equipment industry trends will be presented through an interactive panel discussion of top equipment companies debating Generation 10, technology innovation, fab productivity and more. Speakers for this session include:

  • Keynote Speaker: James P. Clappin, president, Corning Display Technologies
  • Charles Annis, vice president, Manufacturing Research, DisplaySearch
  • William K. Smyth, senior manager, 3M Marketing and Business Development, 3M Optical Systems Division

The session will also feature an “Equipment Maker Roundtable,” bringing some of today’s leading equipment manufacturers together to discuss the latest trends, challengers and outlook facing this market segment. Roundtable executives include:

  • ID Kang, general manager and corporate vice president, AKT, Inc., an Applied Materials Company
  • Avi Elazar, director of sales and marketing, Display Division, Orbotech Ltd.
  • Dave Freeman, senior technical marketing manager, Photon Dynamics

Other U.S. FPD presentation highlights include:

  • Brian H. Berkeley, vice president of LCD Business at Samsung Electronics, will talk about manufacturing and R&D trends in TV panels in the “Quest for the Best-Looking Picture at the Lowest Cost” session.
  • Dr. Randy Waynick, senior vice president of Marketing in Home Products Division of Sony, will give a presentation on OLED TVs.
  • Representatives from Samsung SDI, Polymer Vision, Universal Display and DisplaySearch will present during the OLED and Flexible Displays Session.

The DisplaySearch 10th Annual U.S. FPD Conferencewill be held March 10–13, 2008 at the Hilton La Jolla Torrey Pines in La Jolla, California. The event will focus on all major and emerging FPD applications, as well as production equipment and key components and materials. It will boast two-and-a-half days of general sessions, many interactive sessions, three days of cutting-edge exhibits, and numerous networking opportunities. Attendees will gain an instant return on investment by walking away with tens of thousands of dollars worth of market data and industry insight.

Other presenting companies include AMD, AMIMON, AU Optronics, Dell, Dolby Laboratories, Genesis, Goldman Sachs, Intel, Kodak Display Business, LG.Philips LCD, NEC, Nokia, Samsung, Sony, Panasonic, Universal Display, Verizon and more.

To register for DisplaySearch’s U.S. FPD Conference, please click here. http://guest.cvent.com/i.aspx?5S,M3,aaf8136e-9236-493d-85bf-db575fb06f0e&Refid=SEMI08