Area demand for TFT LCD optical film to grow 11 percent in 2010

AUSTIN, USA: Price erosion and cost reduction pressure from TFT LCD makers are having strong impacts on the TFT LCD optical film market.

In its recently-released Quarterly Display Optical Film Report, DisplaySearch reports that demand for all TFT LCD optical films is expected to grow from 543 million square meters in 2009 to 606 million square meters in 2010, up 11 percent Y/Y.

However, due to price declines, TFT LCD optical film revenues are expected to stay flat at $9.1 billion. On the other hand, growing interest in green LCD TV panels and LED backlights are driving new backlight designs to add more prism films, reflective polarizers or micro-lens films, creating new opportunity for film makers who can provide improved technology.

DisplaySearch defines TFT LCD optical films to include polarizers, which linearly polarize the light in to and out of the LCD panel, and backlight optical films, which are films or sheets that improve optical efficiency, recycle light in the backlight system, or diffuse brightness for uniformity.

Backlight optical film types include normal and multi-functional prism sheets, and micro-lens, reflective polarizer, diffuser and reflector films. While polarizers represent approximately one-third of total area, they account for approximately two-thirds of revenues, as shown in this table.

Table 1: TFT LCD Optical Films Shipments and Revenues (Millions of Square Meters, Millions of Dollars)Source: Q4’09 Quarterly Display Optical Film Report

Increased demand in display area is leading polarizer and backlight films to grow by 13 percent and 11 percent Y/Y, respectively. But, while polarizer revenues will benefit from LCD TV, resulting in 2 percent Y/Y growth, backlight films are facing price pressure and are expected to decline by 5 percent in 2010.

“Polarizers are essential for LCD panels, especially in wide viewing angle applications, while films that improve the brightness of the backlight and the LCD module are very important for cost reduction and green panel design; both grow with panel demand,” noted Brian Chen, DisplaySearch TFT LCD & Materials Research Director and the author of the Quarterly Display Optical Film Report.

“However, cost pressure in the optical film market is limiting revenue growth. As this trend is likely to continue for the next few years, making technical improvements to reduce production and materials cost is the most critical focus for polarizer and backlight optical film suppliers.”

Chen added: “Especially in LCD TV, where power consumption is a major focus of set design, panel makers need to reduce the number of lamps and LEDs, using prism sheets to maintain brightness. Prism sheets are gradually becoming a requirement in LCD TV panels, which will support increases in prism film average area price and help to reverse the revenue decline.”