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The East Asian LCD Monitor Industry, 2003 and Beyond

March 22, 2004 / Lina Li

46 Page, Statistics Report

US$2,050 (Single User License)

Abstract

Stable global economic development and peak season effects drove fourth quarter East Asian computer display shipment volume up 9.2% sequentially, to 33.5 million units. As US and European market acceptance rose, LCD monitor demand leapt, yet the LCD panel shortage trimmed LCD monitor shipment share growth, to 44.3%, or 14.8 million units. In the first quarter of 2004, as PCs enter the light retail season, the LCD monitor panel shortage should ease. LCD monitor growth is heavily driven by CDT monitor replacement, and the replacement effect will mitigate a seasonal downturn. 2004 will likely not see a departure from the trend of successive quarterly growth.

List of Topics
East Asian and Taiwanese LCD monitor quarterly shipment volume forecast up to the fourth quarter of 2004 and annual shipment volume forecast up to 2008. Special discussion on the future impact of the panel shortage on industry concentration and bundle rates. Fourth quarter 2003 review of East Asian LCD monitor volume, value, ASP, market share, shipments by maker origin, rankings, industry concentration, product mix, product mix by tier. Fourth quarter 2003 review of Taiwanese volume, value, ASP, and volume by tier, business types, product mix, product mix by tier, shipment destinations, and production locations. Competitive profiles of Korean, Taiwanese, and Japanese players.

Amtran, AOC, BenQ, CCPT, Chi Mei, Compal, Dell, Delta, HP, Jean, LG, Lite-On, NMV, NPG, Philips, Proview, Quanta, Sampo, Samsung, Sony, Tatung, Viewsonic

List of Figures
Figure 1 The East Asian PC Monitor Industry's Shipment Volume, 1Q 2002 - 4Q 2003

Figure 2 The East Asian PC Monitor Industry's Shipment Volume, 2002 - 2003

Figure 3 The East Asian LCD Monitor Industry's Shipment Volume, Shipment Value, and ASP, 1Q 2002 - 4Q 2003

Figure 4 The East Asian LCD Monitor Industry's Shipment Volume, Shipment Value, and ASP, 2002 - 2003

Figure 5 The East Asian LCD Monitor Industry's Shipment Volume by Tier, 1Q 2003 - 4Q 2003

Figure 6 The East Asian LCD Monitor Industry's Product Mix, 1Q 2003 - 4Q 2003

Figure 7 The East Asian LCD Monitor Industry's Shipment Volume by Product Mix, 1Q 2003 - 4Q 2003

Figure 8 The East Asian LCD Monitor Industry's First Tier Maker Product Mix, 1Q 2003 - 4Q 2003

Figure 9 The East Asian LCD Monitor Industry's First Tier Shipment Volume by Product Mix, 1Q 2003 - 4Q 2003

Figure 10 The East Asian LCD Monitor Industry's Second Tier Maker Product Mix, 1Q 2003 - 4Q 2003

Figure 11 The East Asian LCD Monitor Industry's Second Tier Shipment Volume by Product Mix, 1Q 2003 - 4Q 2003

Figure 12 The East Asian LCD Monitor Industry's Shipment Volume by Maker Origin, 2002 - 4Q 2003

Figure 13 The East Asian LCD Monitor Market Share by Maker Origin, 2002 - 4Q 2003

Figure 14 The East Asian LCD Monitor Industry's Shipment Volume by Maker Origin, 2002 - 2003

Figure 15 The East Asian LCD Monitor Market Share by Maker Origin, 2002 - 2003

Figure 16 The Taiwanese LCD Monitor Industry's Shipment Volume, Shipment Value, and ASP, 1Q 2001 - 4Q 2003

Figure 17 The Taiwanese LCD Monitor Industry's Shipment Volume by Tier, 1Q 2002 - 4Q 2003

Figure 18 The Taiwanese LCD Monitor Industry's Shipment Volume by Tier, 2002 - 2003

Figure 19 The Taiwanese LCD Monitor Industry's Product Mix, 1Q 2001 - 4Q 2003

Figure 20 The Taiwanese LCD Monitor Industry's Shipment Volume by Product Mix, 1Q 2001 - 4Q 2003

Figure 21 The Taiwanese LCD Monitor Industry's First Tier Maker Product Mix, 1Q 2003 - 4Q 2003

Figure 22 The Taiwanese LCD Monitor Industry's First Tier Shipment Volume by Product Mix, 1Q 2003 - 4Q 2003

Figure 23 The Taiwanese LCD Monitor Industry's Second Tier Maker Product Mix, 1Q 2003 - 4Q 2003

Figure 24 The Taiwanese LCD Monitor Industry's Second Tier Shipment Volume by Product Mix, 1Q 2003 - 4Q 2003

Figure 25 The Taiwanese LCD Monitor Industry's Shipment Volume by Business Type, 1Q 2001 - 4Q 2003

Figure 26 The Taiwanese LCD Monitor Industry's Shipment Volume by Destination, 1Q 2001 - 4Q 2003

Figure 27 The Taiwanese LCD Monitor Industry's Shipment Share by Destination, 1Q 2001 - 4Q 2003

Figure 28 The Taiwanese LCD Monitor Industry's Production Sites, 1Q 2002 - 4Q 2003

Figure 29 The East Asian LCD Monitor Industry's Shipment Volume, 1Q 2003 - 4Q 2004

Figure 30 The Taiwanese LCD Monitor Industry's Shipment Volume, 1Q 2003 - 4Q 2004

Figure 31 The East Asian LCD Monitor Industry's Shipment Volume, 2002 - 2008

Figure 32 The Taiwanese LCD Monitor Industry's Shipment Volume, 2002 - 2008

List of Tables
Table 1 Major East Asian LCD Monitor Manufacturer Ranking by Tier, 2002 - 4Q 2003

Table 2 Major East Asian LCD Monitor Manufacturer Ranking by Tier, 2002 - 2003

Table 3 Major Taiwanese LCD Monitor Manufacturer Ranking by Tier, 1Q 2002 - 4Q 2003

Table 4 Major Taiwanese LCD Monitor Manufacturer Ranking by Tier, 2002 - 2003

The Effect of Panel Supply on Industry Concentration

Quarterly shipment volumes in 2003 suggest that during the panel shortage, large customers, based on scale considerations and the ability to obtain panels, chose outsourcing partners with somewhat large scale as well as those owning panel factories. Large PC vendors' orders are concentrated in the first tier, causing shipments of first tier makers to climb with vendor market share. Hence, first tier shipment share increased from 52.6% in the first quarter of 2003 to 58.1% in the fourth quarter. With monitor vendors raising LCD monitor sales targets for 2004, LCD panel shortages will most likely increase in 2004, leading to a replay of 2003's struggle for LCD panels, intensifying competition and pressure of elimination, and making future development more difficult.

As the industry enters the shakeout phase, in addition to scale competition, profit is key. After all, the market has both large and small makers with differing attributes and development trajectories. Selecting customers with compatible development characteristics is important, and will be crucial to the survival non-first tier makers.

Increased PC-Bundled Shipments in 2004

In 2003, stand-alone replacement demand was the key factor driving LCD monitor shipments, especially in key markets of US, Western Europe, and Japan. Though the first quarter of 2004 will be low season, growth is likely to be strong compared to the same period of 2003. Coupled with falling prices for mainstream LCD monitors sizes over the last few years, and rising consumer acceptance of LCD monitors, PC makers will even more aggressively promote LCD monitors, resulting in rising bundled sales.

Looking at 2004, strong growth in the PC market will have a positive effect on LCD monitor sales. Major PC vendors possess large-scale procurement advantages and negotiate directly with panel suppliers; this greater hold on panel resources will facilitate stable growth of bundled sales. However, while current price levels of 15" monitors are well suited to the bundled market, share of 15" LCD monitor panel supply continues to fall. Yet to generate greater receptivity of 17" monitors for bundling with PCs, 17" monitors will need an improved price advantage before effectively experiencing higher bundle rates.

Appendix

Research Scope

The East Asian LCD monitor industry includes the global production and sales of LCD monitor by manufacturers headquartered Taiwan, Korea, and Japan. East Asian manufacturers now account for over 99% of total global LCD monitor shipment volume. Coverage includes both branded and OEM/ODM production for 10" or larger LCD monitors used with PCs.

Definitions

Business Types

OEM

The OEM business model entails carrying out product manufacturing or assembly according to specifications supplied by the customer. The OEM business model emphasizes production efficiency; thus, in order to lower costs, customers outsource manufacturing to OEM providers. This cooperation makers a division of labor among design, manufacturing, and sales.

ODM

The ODM business model entails undertaking product design and manufacturing, but not direct retail sales or brand promotion. ODM providers either collaborate with customers on product specifications or independently design products according to customer specifications; the ODM provider then receives manufacturing orders upon customer approval. The ODM model links the sales capabilities of the ODM customer and the design and manufacturing capabilities of the ODM provider, developing a cooperative division of labor throughout the product's value chain.

Branded

The branded business model entails the production of the manufacturing company's own branded products. The manufacturer is involved with both design and production; retail sales and brand promotion are also managed internally.

White-Box

White box is a form of contract manufacturing wherein the manufacturer produces for channel players, and the channel player's brand is affixed for sale.

Glossary of Terms

ASP		Average Selling Price
CDT		Cathode Display Tube
FOB		Free on Board
LCD		Liquid Crystal Display
MFM		Multi-Functional Monitor
ODM		Original Design Manufacturing
OEM		Original Equipment Manufacturing
TFT LCD		Thin Film Transistor Liquid Crystal Display

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