Global and China large-size TFT-LCD industry report 2008-2009

NEW YORK, USA: Reportlinker.com has added the Global and China Large-size TFT-LCD Industry Report, 2008-2009 to its list.

The economic rebound in the first quarter of 2009 was mainly due to LCD TV. The economic recession of Europe and America will only make consumers reduce the consumption on such necessities in the late phase.

Although Europe and America suffered economic recession, the market shares of LCD TV did not fluctuate much because of manufacturers’ promotion strategies, WON depreciation and further development of LCD TV in the first quarter of 2009.

With the push of China and other emerging countries, the market rebounded significantly. Japanese enterprises were panicked and reduced production greatly when economic recession arose, resulting in short supply. This strong rebound was still lack of powerful support, especially in emerging countries. In China, when the property market begins to rebound, real estate sales will promote the consumption on home appliances.

In the mid and late rebound phase of the property market, consumers will wait and see, and real estate sales will decline, so that home appliances consumption will also drop. The unemployment rate is still rising in Europe and America and economic recession has not ended, so if consumers are aware of the fact, they will certainly cut expenditure.

From Q1 2005 to Q4 2010, the fluctuation of TFT-LCD industry seems to be magnified, but the fact is not. The global economy has experienced the most significant recession since the Great Depression in 1929. TFT-LCD industry is the upstream of consumer electronics and IT industry, and the two industries always follow the trend of the global economy.

Excluding external factors, the fluctuation of TFT-LCD industry is lessened, especially the extent of decline shrinks, which is because LCD TVs develop rapidly, IT industry is relatively stable and notebook computers develop well. Before 2000, 80 percent of TFT-LCDs were used in notebooks, thus on which the TFT-LCD industry was highly dependent, and then TFT-LCD industry fluctuated a lot.

In the future, the LCD TV industry, netbook industry and LED notebook industry will enter the mature stage, which will make TFT-LCD industry tend to fluctuate less, but on the other hand, the industry will lack growth momentum.

The TFT-LCD industry relies heavily on upstream raw materials and components. In the cost structure of TFT-LCD, upstream components account for 70-85 percent. Therefore, to be cost-efficient shall be supported by the strong upstream, but for Chinese enterprises, it is hard to do so. In many Chinese enterprises, including joint ventures, profit is often transferred to the upstream.

In addition to glass substrates, Taiwan has nearly all of upstream industrial chains, which is the biggest driver for Taiwan's success in TFT-LCD industry. TFT-LCD industry can prompt a huge industrial chain. Japanese manufacturers occupy the top position in the industrial chain, and they usually sell their technology rather than products.

Almost every Taiwanese manufacturer in the upstream industrial chain has received technical support from Japan, so do South Korea manufacturers. Taiwanese manufacturers’ success lies in fast access to market through technology licensing, while Japanese manufacturers rely on supporting Taiwanese enterprises to combat South Korea rivals. Japanese manufacturers still master the upstream firmly.

Upstream components include glass substrate, color filter, polarizer, backlight module, driver IC, CCFL lamp and LED.

As for non-key components, these companies have adequate resources, especially AUO and Chimei. Mainland China enterprises invest on the middle and downstream which brings production value fastest, but they neglect the efficiency and quality of the investment, and thus lack cost competitiveness.

Short-term glass substrate shortage problems a positive development to the panel industry

TAIPEI, TAIWAN: According to WitsView's analysts, the rapid utilization rate increases by panel makers has cleared away the previously accumulated glass substrate inventory in recent months. The current glass substrate output is now immediately consumed by eager buyers.

As the capacity increases from the furnaces can not keep up with the rising glass substrate input, a shortage has occurred. But it should be noted the shortage only encompasses certain panel makers and production lines. The G5 and G6 currently face a more serious glass substrate shortage, while the G7.5 and above are less affected, due to the more limited of both suppliers and buyers.

But despite the supply gap and pressure from clients, glass substrate makers have no plans in moving up their schedule in restarting additional furnaces. The primary reason lies in their different market focus against panel suppliers.

Given the strong sales of some regions, and the persisting panel prices growth, it has triggered a sharp panel order increase in the short-term. But the influx of panel orders does not 100 percent represent a full market recovery. One must also consider the global end market sales, inventory levels of the entire supply chain and actual consumer spending.

The glass substrate segment is a market dominated only by a few players. Thus, their respective market share is considered more stable, rendering them to pay more attention to the longer term panel growth over gaining short-term orders. Fortunately, with the traditional strong third quarter arriving, the concerns on the actual panel demand should ease. Thus, additional furnaces are expected to be restarted in the near future. After two to three months, the supply gap should improve, as the glass substrate capacity gradually increases in 3Q09.

Although the current glass substrate shortage has resulted in panel makers unable to accommodate all the orders, it is a positive development to the industry as a whole. The tight glass substrate supply will help control the total panel output, which will help maintain the panel demand momentum and upward panel price trend. Moreover, this also minimizes earlier inventory pull-ins, which are conducted amid fear of further panel price increases. This helps prevent possible inventory build-ups, which may subsequently affect the demand and supply during forthcoming quarters.

Amid the current tight supply, it has naturally helped stabilize the glass substrate and color filter prices. "For 2Q09, the former is expected to all by 2~3 percent, while the latter is set fall by 4~5 percent. As for 3Q09, their respective price declines are projected to further narrow," said Eric Chiou, WitsView's component analyst.

Global motherboard shipment exceeds expectations in 1Q-'09, but still declines YoY

TAIPEI, TAIWAN: According to research of the Taipei-based Market Intelligence & Consulting Institute (MIC) conducted as part of the ITIS project, the worldwide motherboard shipment performance in the first quarter of 2009 exceeded the expectations of motherboard manufacturers and component suppliers as motherboard shipment benefited from the demand increase in the clone market, low inventory levels and the peak season in the Chinese market.

Worldwide motherboard shipment volume in the first quarter of 2009 is estimated at 32 million units. Still, due to the unfavorable economic environment and tight supply of key components, shipment fell almost 16 percent year-on-year and 6 percent sequentially. Worldwide motherboard shipment value is estimated at US$1.50 billion in the first quarter of 2009.

Looking at different regional markets, China had the most eye-catching performance. According to MIC Industry Analyst Vincent Chang: "The Chinese market was mainly stimulated by the traditional peak season in the first quarter, the rural home appliance subsidy program aimed at promoting home appliances in the countryside, and expanding construction projects. The Asia-Pacific region excluding China also had a relatively good performance.

"In North America, even though market development slowed down, the performance was still better than the overall economy. Europe experienced the most severe slowdown in the first quarter. Some emerging markets and countries in Eastern Europe still featured a certain level of demand, but as credit risks have not completely disappeared, motherboard makers are careful in their shipments, affecting the scale of shipments to these markets."

Regarding shipment in the second quarter, Chang stated: "Markets in each region are entering the off-season, and channel inventory replenishment activities are slowing down. Market shipment momentum is thus weakening. Only several PC brands have continued to make procurements in April. Momentum in the clone market is evidently lower than in the first quarter. Therefore, a key issue in the second quarter will be the status of motherboard product inventories at the end of May, which will impact the production and shipment plans in preparation for sales in the third quarter."

It is currently forecast that worldwide motherboard shipment volume in the second quarter of 2009 will only slightly exceed 30 million units, with the year-on-year decline expected to exceed 13 percent. At the end of April, suppliers started to increase the supply of key components; combined with the falling demand, it is expected that the tight supply situation of key components will come to an end by the end of May.

Looking at the full-year development, with the large-scale decline in IT spending in 2009, opportunities for large growth in the enterprise market are limited. Consumer market is still greatly affected by the DTR (Desktop Replacement) effect.

Even though market demand has exceeded forecasts made in the fourth quarter, shipment in the first quarter has led to a decline in second-quarter shipments. Therefore, worldwide motherboard shipment volume in the full-year 2009 is expected to reach 134 million units, down almost 9 percent compared to the previous year.

Panel makers raise prices in 1HMay amid financial pressure

TAIPEI, TAIWAN: According to WitsView’s initial survey, the end market demand in 2Q09 remains uncertain. Still, amid the impact from the financial storm last year, the 2009 production plans in the general supply chain have been overly conservative. In addition, panel makers were forced to significantly cut back their utilization rates to reduce their cash out pressure in 4Q08.

Owing to China’s demand and better-than-expected sales in the emerging markets, Europe and the US during 1Q09, the panel demand started to pick up after Jan09. Boosted by China’s demand and downstream clients’ inventory replenishments, the monitor and TV panel shipments, both respectively, grew by 2 percent QoQ.

As for the large-sized NBs, the still sluggish demand resulted in NB panel shipments to tumble by 19 percent over 4Q08. Fortunately, the persisting inventory clearing, inventory restocking by downstream vendors and new product launches of 16:9 LED backlit NBs has helped NB panel shipments to also experience monthly increases now.

With panel makers still posting big losses in 1Q09, they must try to further raise prices in 2Q09 to generate more cash in. For 1HMay, WitsView projects IT and TV panel prices to see a 2~3 percent rise.

The panel prices for 1H May will be released by WitsView on May 5th.