On November 10, Geun-hye China's President Xi Jinping and South Korean president Park signed a FTA (Free Trade Agreement), which is reportedly to eliminate tariffs on 90 percent of goods traded between the two countries. Presently, China still levies 5% import taxes for cell panels (32" or smaller LCD TV panels) of foreign entities. "The degree of impact of China-Korea FTA on Taiwan will highly depend on whether China will provide China local firms further protection to impose additional import duties on LCD TV panels of foreign panel makers," said Brian Chen, industry analyst with MIC (Market Intelligence & Consulting Institute), a Taipei-based ICT research institute.
Nevertheless, China's determination to increase adoption share of self-made panels has exerted the increasing pressure on both Taiwanese and Korean panel makers. "However, as 50% to 60% of LCD panels manufactured by Korean makers are still for their own TV brands, Taiwan's players with the most comprehensive product portfolios still stand a higher chance of tapping the needs of Chinese TV brands in the short-run," Chen added.
"Comparing to the signing of China-Korea FTA, the fact that more 8.5G panel production lines in China will be available soon is going to impact Taiwan more," said Chen, "because this is what Taiwan's panel makers are currently lacking." Chen pointed out that whether Korean brands are able to sustain or increase foothold in the market as this could lead to a limited supply of Korean panels to Chinese or other foreign brands and whether China will increase protection for local brands are two underlying risk factors for Taiwan's LCD TV panel industry in the future.
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Table Taiwanese and Korean LCD TV Panel Production Line Capacity by Generation and by Screen Size
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Generation
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Panel Maker
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# of Line
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LCD TV Panel Size
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G5.5
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Innolux
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1
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58
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G6
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Innolux
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2
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32, 39, 40（39.5）, 65
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AUO
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2
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32, 39, 65
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LGD
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1
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65
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G7
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Samsung Display
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2
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40, 70, 75
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G7.5
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Innolux
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1
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50, 75, 85
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AUO
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2
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「42, 43」, 50, 75, 85
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LGD
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1
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「42, 43」, 50, 84
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G8.5
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Innolux
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1
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23.6, 42
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AUO
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2
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32, 46, 55
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LGD
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3
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32, 「42, 43」, 「47, 49」, 55, 60, 65
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Samsung Display
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3
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32, 「46, 48」, 55, 65, 85, 88
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Note:
1. Bold, underlined text indicates major panel display sizes of panel makers
2. Korea's LGD and Taiwan's AUO will gradually replace 42" with 43" panels
3. Korea's Samsung Display is replacing 46" with 48"; LGD is replacing 47" with 49" panels
Source: respective companies, compiled by MIC, November 2014
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About MIC
Market Intelligence & Consulting Institute (MIC), based in Taipei, Taiwan, was founded in 1987. MIC is Taiwan's premier IT industry research and consulting firm providing intelligence, in-depth analysis, and strategic consulting services on global IT product and technology trends, focusing on markets and industries in Asia-Pacific. MIC is part of the Institute for Information Industry. https://mic.iii.org.tw/english