Abstract

Customer Relationships and Industry Concentration

With the enormous opportunity provided by CRT replacement, the Taiwanese LCD monitor industry is currently in a growth phase and competitors are numerous, with the shipment rankings reshuffling every quarter. Building on a foundation of customers acquired during the days of CRT monitors, and bringing into full play their superiority in panel resource acquisition during this period of panel shortage, the four largest Taiwanese LCD monitor makers should extend their shipment growth lead over their competitors. Expanding market scale will also be coupled with rising market concentration. Given their stable market position, market concentration among the top four should exceed 60%.

As panel demand begins to exceed supply, obstacles to competition for panel resources will be swept aside. Restrained in the past by limitations on panel resources, the differences in ability to obtain panel among the various makers will lead to clear differences in scale and development among them. Customer choices of compatible cooperative partners will gradually become clearer, forming a new competitive threshold -- a threshold that in the future will be more difficult for other competitors to cross.

Prices Limiting Growth of Larger Sizes

With panel prices remaining at a peak, monitor prices should remain high. This, coupled with rising OEM shipment share among Taiwanese PC vendors, should limit growth of large size LCD monitors. In the second quarter the combined shipment share of 15" and 17" sizes reached 85%, a slight increase over the first quarter. The fall in 15" LCD monitor shipment share began to slow. From this it is apparent that increasing size must be mated to attractive prices in order to catalyze shipment growth.

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