Over the long term, mobile phone will maintain the largest scale of any display application, with demand expected to exceed 700 million units in 2008. TVs will be the second largest: global demand is projected to hit 210 million units in 2007, with CRT (Cathode Ray Tube) TV comprising the larger share at 177 million units. LCD TV is anticipated to account for over 33 million units, compared with eight million in 2004. LCD monitor is forecast to reach 135 million units in 2008.

However, in general Taiwanese makers will continue to occupy the more mature segments in both panel production and in the major applications. With product mix so highly concentrated in the low-price band, profitability will be lower than Japanese and Korean counterparts. Moreover, the global display industry is facing high import duties in Europe and China.

Yet as Japanese and Korean makers have had a longer history in these markets, they already possess plants in North America, South America, and Europe, as well as hold advantages in global logistics and brand recognition. Whether running contract manufacturing or branded businesses, Taiwanese makers are once again faced with the necessity of migrating production. Long reliant on inexpensive labor in China and stringent production cost controls, Taiwanese makers have to face the additional challenge of company scale. Taiwanese display makers are primarily small and medium enterprises, and lack the economies of scale to migrate; automated production and cross-cultural management also present formidable challenges.

LCD TV

The LCD TV market is expected to reach 8.3 million units in 2004, and with 5.5G and higher lines ramping up production in 2005, 30" and 32" LCD TV prices are projected to fall to between US$1,000 and US$1,200. This price point is likely to drive demand in the US and Europe, bringing 2005 market size to 15.3 million units. If Taiwanese makers are to take advantage of the resulting opportunities for branded or contract manufacturing business, in addition to more competitive, segmented offerings, they will need to emulate the global presence of the major brands, and build production sites in different areas to lower import duties and shipping fees.

High Definition TV

In the United States, with the Federal Communications Commission mandating that receivers for terrestrial or cable digital television be built into TVs, high definition channels are increasing and coverage is expanding. Added that receiver and TV prices are rapidly falling, the market is poised for growth. In the large-sized TV segment, rear-projection TVs with built-in digital receivers that also support digital content protection are expected to be the largest beneficiary. Demand for set-top-boxes will come chiefly from cable and satellite; however, as cable receivers will be built into TVs, growth in set-top-boxes for satellite TV will be for more pronounced.

LCD Monitor

At present the majority of LCD monitors are sold in the United Sates, Western Europe, and Japan. Considering the current global installation base of CDT (Color Display Tube) monitors is estimated at 200 million to 300 million units, price will be key toward accelerating replacement by LCD monitors. Panel prices are expected to fall throughout 2005, which will help speed replacement in Western European and US markets; for example, 17" LCD monitors are forecast to fall to roughly US$300. In emerging markets, 17" CDT monitors are priced at US$200 and lower -- US$200 is thus the sweet spot that will stimulate demand in these areas.

Small and Medium Size Panel

Although Taiwanese makers aggregately comprise the largest source of global small and medium panel supply, volume is heavily concentrated among lower priced offerings such as MSTN (Monochrome SuperTwist Nematic) and CSTN (Color SuperTwist Nematic), which will limit the future scale of adoption. STN producers will need to cooperate with makers turning out offerings using other display technologies to fill in these product line gaps. TFT (Thin-Film Transistor) makers will need to strengthen production flexibility, expand their customer base, and break away from an overemphasis on large panels. OLED (Organic Light Emitting Diode) makers would be best served by adopting strategies that achieve rapid penetration and growth in market share; they will also need to develop toward larger-sized active matrix panels to expand present market scale.

Large Size LCD Panel

In the second quarter of 2004 Taiwanese large size LCD panel shipment volume had already surpassed that of Korean makers, yet volume for use in notebook PCs and LCD TVs fell behind. Furthermore, a marked upswing in 5G capacity and lower than expected demand for display applications created an oversupply of panels in the second quarter. Assuming that no problems arise among components, oversupply should continue into 2005. With the fall in prices, competitiveness in cost control and customer relationships will be put to the test.