Abstract

Japanese Panel Makers' Strategies

Japanese makers have tried to maintain the lead in the establishment of TV standards, such as Sharp' investment in a 10G production line, which is expected to ramp up in the first quarter of 2010. In the meantime, Japanese companies are forming strategic alliances to ensure panel supplies. Sony has been working with Samsung, and has been cooperating with Chinese companies to jointly invest in a 7.5G production line; Toshiba is likely to purchase Philips stake in LG Philips.

Due to tariffs and local market demand, Japanese makers are strengthening their global presence. Both Sharp and IPS Alpha have established back-end panel module plants in Eastern Europe to address demand for LCD TV logistics; Orion and Sumitomo Chemicals are also considering moving into Eastern Europe.

To prevent advanced LCD technology from spreading overseas, Japanese companies have begun adopting a "Black Box" business model. Furthermore, Japanese makers are aggressively planning R&D on next-generation display technology.

Korean Panel Makers' Strategies

Korean makers have been forming partnerships with upstream materials suppliers to ensure stable supply, such as Samsung working with Corning and LPL with NEG on substrate supply.

The Korean government is in talks with the United States and EU to reach FTA (Free Trade Agreement) agreements. In addition, the Korean government has been making efforts to attract leading US and European precision machinery, component, and material manufacturers to invest in Korea, thereby strengthening the upstream segment of the Korean panel industry's value chain. Korea is also aggressively planning for future information display technology projects.

Korea Institute of Science and Technology, which is responsible for support of basic scientific research, has invested over 175 billion Won (US$187 million; US$1=938 Won) in next-generation information display projects, with 100 billion (US$107 million) of the investment coming from government funds and 75 billion (US$80 million) from private funds. These projects will also nurture Korean makers' competence in basic display technology and improve new materials and production process technology.

The establishment of KDIA (Korean Display Industry Alliance) has brought together the Samsung and LG enterprise groups, which will begin to purchase panels from each other in late 2007. LPL has abandoned investment in 5.5G lines and begun investing in 8G line instead, which will greatly increase production capacity and ensure steady LCD TV shipments.

In order to strengthen global presence, LPL has set up a module plant in Europe and is expected to begin mass production in late 2007, which will be able to address demand for LCD logistics and counteract Europe's tariffs on panel. The company's upstream component suppliers are also moving into Eastern Europe to form industry clusters.

Chinese Panel Makers' Strategies

Chinese makers are aggressively recruiting foreign investment and building next-generation production lines, for example, the negotiation with Sharp to build a 7.5G line. Mergers between panel manufacturers (BOE, SVA, and IVO) in order to expand operation scale and increase production capacity have also been seen in China. Chinese makers are using domestic market demand to attract foreign suppliers and customers to China. SVA for example has attracted NEG to Shanghai, and BOE has attracted Corning to Beijing. Other efforts include improvement in yield rates and production efficiency and inclusion of the flat screen display industry as a key part of the Eleventh Five Year Plan.

Taiwanese Panel Makers' Strategies

Faced with serious competition from China, Japan, and Korea as well as from changing environmental conditions, Taiwanese makers will be keeping an eye on future demand for next-generation technology. It is expected that Taiwanese makers will set up timelines for building next-generation panel production lines, and aggressively increase capacity utilization rate. Taiwanese PC panel makers will try to secure orders from international brands, while LCD TV panel makers are likely to cultivate the segments where Japanese and Korean manufacturers have been unable to fulfill demand due to insufficient production capacity. LCD TV makers may also strengthen partnership with cannel players and IT brands so as to  rival Japanese and Korean brands' dominance in the TV market, expand their customer base, and counteract the loss of outsourcing opportunities as Japanese and Korean brands expand into next-generation production.

In the future, Taiwanese makers are projected to use the advantages of the Taiwanese panel industry to seek opportunities for joint ventures, strategic alliances, and contract manufacturing with Japanese companies and to strengthen supply chain interaction. Besides making the industry value chain more localized, Taiwanese makers also attempt to increase cooperation with international companies. Development of advanced technology for better competitiveness is also a key strategy for the Taiwanese panel industry in the future.

Appendix

List of Companies