Top 10 FPD equipment suppliers of 2008: VLSI Research

SANTA CLARA, USA: VLSI Research Inc. has announced the Top 10 Flat Panel Display (FPD) Equipment Suppliers of 2008. After two years of underinvestment by their customers, the manufacturers FPD equipment turned the corner by recording a 32 percent growth in sales in 2008.

The industry reached $8.2 billion in revenues, a strong bounce-back from the 26 percent decline in 2007. Once again the leading suppliers were Applied Materials, Ulvac, and Tokyo Electron, with all three managing double-digit growth rates. Dainippon Screen and Canon followed, as the two were catapulted into the top five by remarkable 180 percent and 120 percent growth rates, respectively.

Though there were multiple changes in the rankings, the Top 10 were composed of the same companies as last year. Nikon moved up a couple spots to 6th place, followed by Daifuku. Hitachi High-Technologies and Hitachi Plant Technologies finished the year 8th and 9th, while Shibaura Mechatronics closed out the Top 10. The group grew 35 percent as a whole and continues to represent 70 percent of the overall industry. Of the top ten, all but one are Japanese companies.

Although relatively young, the FPD equipment industry is showing signs of maturity. Despite the volatility on a yearly basis, the market size has stabilized around an average of $7.7B for the past four years. Most of the capital expenditures by the display manufacturers are capacity-driven, as the end-product cycles are relatively slow and therefore limit technology buys. The last major transition in the industry occurred when Generation-8 fabs came online in 2004. However, Sharp is planning to commence production in its Generation-10 fab by October 2009, which could engender a new wave of spending by other LCD makers.

It can be argued that the strong growth in FPD equipment sales was the result of mistimed anticipation on the part of their customers. Orders for flat panel display equipment started picking up as early as the fourth quarter of 2007 and continued strong throughout the first half of 2008. Display manufacturers, who spend their capital expenditures on FPD equipment, were heavily investing in Generation-8 fabs and hoping that the summer Olympics would stimulate a demand for LCD televisions.

Unfortunately, the high expectations were not met, and in fact display manufacturers suffered four quarters of sequential declines in 2008, ending the year down 4 percent. Exacerbating the disappointment was the depressed consumer confidence following the worldwide economic meltdown in September. As a result, FPD equipment sales saw a slowdown in the second half of the year, but not before significant orders were secured.

Given the current macroeconomic prospects, VLSI Research expects the FPD equipment industry to decline by 47 percent in 2009. Display manufacturers already overspent on capacity in 2008, and they are now projected to shrink by 21 percent in the current year due to deteriorating consumer spending.