Abstract
Despite the flagging demand traditionally evident during the first quarter, CDT monitor replacement effects helped Taiwanese LCD monitor shipments hit reach over 10 million units, only a 1% decline from the fourth quarter of 2003 and 48.3% year on year growth. LCD monitors for the first time accounted for over half of total Taiwanese monitor shipments. Seasonal factors will continue to dampen demand in the second quarter and panel capacity will increase; the consequent slowing in the advance of panel costs with bring the CDT monitor replacement effect in to fuller play, creating the possibility of a new volume high in the second quarter of 2004.
LCD monitors comprised over half of total Taiwanese monitor shipments in the first quarter of 2004, and Western Europe, the US, and Japan accounted for close to 75% of LCD monitor shipments; these developments indicate that whether stand-alone or bundled, LCD monitor sales are heavily concentrated in developed countries. Essentially, as the price gap between LCD and CDT monitors closes down to a multiple of about two, developed nations or early adopting, high-income consumers display a high degree of acceptance. Prices thus have further room to drop before accelerating LCD monitor penetration in other regions
The stimulation of demand through lower prices not only highlights the necessity of lower component costs, but also points to profitability difficulties Taiwanese makers will face, especially considering the high concentration of ODM/OEM business. Additionally, in the first quarter of 2004 the top five Taiwanese makers already comprised 67% of shipments; as the Taiwanese LCD monitor industry sees a climbing level of concentration, the scale and developmental trajectory of each maker are exhibiting differences. For one, makers exploring opportunities in branded business. Additionally, as the environment for PC applications becomes ever more diverse, and as display technologies continually evolve, demand in different market segments is climbing. This diversity offers makers new niches in which to develop.
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 computers.
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 forms 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.
Private label
Private label 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
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ASP |
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Average Selling Price |
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CDT |
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Cathode Ray Tube |
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CRT |
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Cathode Ray Tube |
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LCD |
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Liquid Crystal Display |
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PDP |
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Plasma Display Panel |