TPK’s high-profile expansion drives growth or contraction in touch NB development

TAIWAN: TPK, the major manufacturer in the touch module industry, has led the way in Nov’ 12 to declare the capacity expansion plan in the Taichung G4.5 plant of its subsidiary Cando, followed by the cooperative alliance with Sintek on the front-end OGS capacity published at the end of December.

In addition, it announced yesterday to build the new G5.5 plant. Several substantial investments and cooperation planned during a short three-month period demonstrate actively the Taiwanese maker’s determination to expand capacity. According to WitsView, the research division of TrendForce, TPK’s high-profile expansion not only suggests the optimistic expectation on the outlook of OGS touch module, but its capacity changes also drive tightly the following developments of touch NBs.      

WitsView indicates that TPK has always been the representative maker among its peers of glass type touch modules, in addition to its touted back-end processes and bonding ability, it holds a certain proportion of product resources on G/G touch module.

On the other hand, TPK invests relatively limitedly on OGS, quite a hit topic recently, and mostly relies on Cando for the advanced technology requirement of the front-end touch sensor. TPK’s announcement to get involved in G5.5 indicates the emerging changes in product portfolios and reveals its decision to bet on OGS.    

According to WitsView’s survey, most supply of OGS touch module in NBs are controlled by TPK, taking Q4’12 for example, the touch NBs accounted for 4-5 percent of the global NB shipment, and TPK held 80 percent of the touch module in that segmentation.

The oligopoly supply chain underlines TPK’s far-leading product competitiveness to its rivals, but the limited capacity cannot meet NB brands’ entire OGS touch module demands, causing short supply.  

WitsView’s research director Eric Chiou says that TPK’s G5.5 investment intents not only to reach the goal of diversifying supply risk but to find a lower cost solution. Many NB brands have switched suppliers to film type touch module makers or the panel makers who are capable of total solution that provides both panels and touch modules, and those are all threats that takes TPK’s share in the touch NB market.

By lifting capacity, TPK can not only meet exiting clients’ demands but gain ample resources to promote business to new clients, maintaining an over 50 percent share in the NB touch module market. Besides, once the mainstream OGS supply is sufficient, it can ease the speed that the remaining touch module technologies, such as G/F/F, penetrate into the NB market.    

The touch NBs have difficulties to stimulate consumers’ purchase with rapid price cuts due to poor integration of Windows8 touch operation, tight OGS supply, and elevated OGS touch module price. As a result, WitsView holds a conservative attitude toward touch NB penetration rate in 2013 at only 7-8 percent.

However, Chiou believes that, TPK’s active expansion in capacity relieves effectively the tight supply issue, once the short supply eases along with the price drop in touch module, the two key problems mentioned above, the OGS short supply and the elevated prices, can be solved at once. In sum, TPK’s capacity movements and pricing strategy are both crucial keys to if the touch NB penetration rate in the second half of the year remains flat or accelerates.