While this figure represents a 64.1% increase from the same period in 2001, it is a slight drop off from the 12.25 million units produced in the first half of 2002. For the first time in history, the Taiwanese LCD panel industry will fail to post an increase in consecutive periods.

MIC Senior Analyst Sean Wu explains, “In the first half of 2002, Taiwanese LCD panel manufacturers reached full capacity with their fourth-generation plants, leaving no room for further growth in the second half of the year.

A second factor is that Taiwanese players are shifting production from 15"panels to 17"panels. Even though fewer 17"panels can be cut from one motherglass, since the price of 17"panels surpasses that of 15"panels by US$120, the total value derived from each substrate is higher. Therefore, the Taiwanese LCD panels industry’s production value will post slight consecutive growth in the second half of 2002, rising to US$3.2 billion, up by approximately US$30 million from the first half of the year.

A third reason Taiwanese production will fail to grow in the second half of the year is that, with the opening of their fifth-generation plants, Korean makers will be able to win additional orders due to their tremendous production capacity. As Korean players ramp up production in their fifth-generation facilities, they will also increase their share of worldwide production, at the expense of their Taiwanese brethren; the Taiwanese LCD panel industry’s share will fall to around 35% in 2003, after reaching 38% in 2002.

As Taiwanese LCD panel manufacturers start to open fifth-generation plants in the spring of 2003, they will once again create room for further growth. In 2003, the Taiwanese LCD panel industry is expected to achieve a production volume of 29.8 million units and a production value of US$7.3 billion, annual growth rates of 22.1% and 15.4% respectively.