According to research of the Taipei-based Market Intelligence & Consulting Institute (MIC) conducted as part of the ITIS project, competition in the global small- and medium-sized TFT panel industry is intensifying in 2009, with Japanese, Korean, Taiwanese, and Chinese panel manufacturers employing diverse strategies to compete in the market.
After the global financial crisis emerged in 2008, terminal product sales in emerging markets have been stronger than mature markets, providing business growth potential for Taiwanese small- and medium-sized TFT panel manufacturers. For example, almost 80% of cell panels used in mobile phones produced in China are supplied by Taiwanese manufacturers.
Mobile phones and digital cameras are the two major applications for small- and medium-sized TFT panels. Looking at worldwide market shipment development in 2009, only Korean mobile phone and digital camera brands are expected to exceed the average growth rate. However, the contribution of own brands to consumption of Korean panel manufacturers' small- and medium-sized panel capacity is limited, only an estimated 12% in 2009. This is one of the reasons for the fierce competition in the small- and medium-sized TFT panel industry.
Japanese manufacturers' LTPS production capacity ratio is still higher than Taiwanese and Korean manufacturers. In 2009, some Japanese small- and medium-sized TFT panel manufacturers have already closed some 3G and lower production lines in order to maintain competitiveness, or they have made acquisitions to simultaneously possess a-Si and LTPS production capacity. Korean panel manufacturers are aggressively pushing AM-OLED panels. For example, LGD has already announced a plan to build a LTPS and AM-OLED production line in 2010. These development strategies will directly threaten Japanese manufacturers.
According to MIC Senior Industry Analyst Pei-Fen Hsieh, "some Taiwanese manufacturers have already started to invest in e-paper technology. Faced with competitive threats from Japan and Korea, Taiwanese manufacturers' strategies include expanding emerging applications to improve profitability and sales opportunities, and looking for mergers and acquisitions to make product lines more comprehensive. Meanwhile, new Chinese manufacturers are aggressively expanding their 4.5G capacity. If Chinese manufacturers are able to satisfy the country's domestic mobile phone panel demand, the sales scope of Taiwanese panel manufacturers will be affected."
The influence of Chinese mobile phone manufacturers on emerging markets will not only affect the supply situation of panel manufacturers from other countries, but also affect the regional market deployment of brand-name vendors. Changes in procurement strategies of Chinese mobile phone manufacturers will have implications for the competition between Taiwanese, Japanese, Korean and Chinese panel manufacturers. Meanwhile, the focus in consumer electronics market competition is on differentiation. Japanese manufacturers still have room to operate in the high-end panel segment, but they could face competitive threats from Korean and Taiwanese manufacturers in the future.
"Terminal product market competition trends affect panel sales. Small- and medium-sized production capacity is usually higher than actual demand. Key factors for manufacturers in terms of obtaining orders include understanding the development potential of emerging and mature markets as well as the development of mainstream products specifications and market demand", said Ms. Hsieh.
Panel manufacturers aim to help their customers create differentiated products by developing new display technologies or offer integrated solutions. Portable products' audio/video function development has become an avenue for AM-OLED technology to move towards the mass market. Taiwanese, Japanese, and Korean manufacturers' technology and capacity investments will be a key element as to whether AM-OLED will be able to replace part of the TFT market.
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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. http://mic.iii.org.tw/english
The Industry and Technology Intelligence Services (ITIS) project is managed by the Department of Industrial Technology of Taiwan's Ministry of Economic Affairs. As part of the project, research is conducted in a variety of fields, including the ICT sector. The project serves both the public and private sector.