TFT LCD driver IC suppliers have indicated that prices are likely to rise in the second half of 2004, stating that some wafer foundries will be raising prices in the third quarter by 10% to 20%. This follows a 15% to 20% increase at the start of the second quarter.

 

Driver IC makers have pointed to both supply and demand side factors effecting the price hike. Many of the world's 6" and 8" wafer fabs have already incurred their maximum depreciation costs, rendering the establishment of new 8" fabs less cost effective. Thus, the capacity available for driver ICs is unlikely to increase over the short term.

 

Additionally, new generation panel plants are continuously coming on-line and ramping up output, and shipments of major applications such as TVs, monitors, notebook PCs, and mobile phones continue to grow. Such furious gains are exacerbating and prolonging the driver IC shortage.

 

Although driver IC profits are low, steady growth in demand and assured capacity utilization has drawn a number of foundries to aggressively develop driver IC production processes. New entrants include SinoMOS, SMIC, HeJian, TSMC (Songjiang), HHNEC in China, Macronix from Taiwan, and Chartered of Singapore. However, most of these players will not be moving into mass production until 2005.