Abstract
Unusually for the small- and medium-sized TFT LCD industry, 2007 saw shortages of supply in some panel sizes. Looking ahead to 2008, manufacturers of small- and medium-sized TFT LCD panel will be investing in new-generation production lines to make up for the shortfall in production capacity. Small- and medium-sized TFT LCD panel is mainly used in consumer electronics products, so there is an extremely wide range of panel sizes and applications, including new applications that are only just starting to emerge. The small- and medium-sized panel market has thus developed along different lines from the large-sized panel market, where IT products account for the largest share. With a considerable amount of new large-sized panel production capacity scheduled to come on-stream in 2009, the allocation of production capacity for small- and medium-sized panel production will become even more complex and challenging.
The Need to Focus on Specific Applications and Panel Sizes
Over the next few years, TV panel will account for the highest share of large-sized TFT LCD panel production capacity. Both Taiwanese and Korean panel makers will be bringing 8G production lines on-stream by 2009, leading to changes in the types of application for which different generations of production line are used. Taiwanese panel manufacturers will also have new 6G production capacity coming on-stream in 2008 ?2009. With the shift towards a 16:9 specification in LCD TV screens, panel makers will be making more use of 6G and 7.5G production lines for LCD TV panel manufacturing. If the share of total 6G and 7.5G production capacity used for LCD TV panel production increases, and if the utilization of 5G production capacity for small- and medium-sized panel manufacturing increases, the relationship between panel supply and demand in the end product market will influence TFT panel makers' development of the small- and medium-sized panel market.
Most of the Chinese panel manufacturers are using 5G production lines. In the past, these manufacturers have not been involved in the production of small- and medium-sized TFT LCD panel. However, if 5G production lines cease to be competitive for the manufacturing of large-sized LCD TV panel, then these Chinese panel makers can be expected to begin establishing new, 6G production lines for LCD TV production, creating the possibility that more 5G production capacity will become available for the manufacturing of small- and medium-sized panel. The impact on supply and demand in the global small- and medium-sized panel market would be substantial. Apart from supply and demand for the products in which TFT LCD panel is used, the introduction of new-generation production lines for large-sized panel will also affect future supply and demand for small- and medium-sized panel.
As regards the competitive balance between Taiwanese, Chinese, Japanese, and Korean manufacturers of small and medium-sized TFT LCD panel, if the addition of new-generation production capacity leads to a significant increase in the overall production capacity available for small- and medium-sized panel production, then those manufacturers that are still using 1G or 2G production lines may find themselves in serious difficulties. Competitiveness in the small- and medium-sized panel industry depends heavily on economies of scale. Those manufacturers that fail to expand their production capacity will be unable to compete effectively in the mainstream segments of the market; they will be forced either to focus on niche markets, or else withdraw from the market altogether.
In the large-sized panel market, the main factors affecting the competition between the leading players are production capacity and the introduction of new-generation production lines. These factors are also important in the small- and medium-sized panel market, but competition in this market is also affected by the wide variety of different product applications for which small- and medium-sized TFT LCD panel is used; manufacturers need to think carefully about which product applications and panel sizes they want to focus on. As noted above, Taiwanese TFT LCD panel makers enjoy the most flexibility in terms of their ability to increase small- and medium-sized panel production capacity. It is anticipated that, in 2008, the Taiwanese manufacturers' combined small- and medium-sized panel production capacity will surpass that of the Japanese panel makers. However, having the largest production capacity is not enough to ensure continued dominance of the small- and medium-sized TFT LCD panel market. Product mix and customer relationships, including branded vendors' requirements and the level of demand for cell panel, will be the key factors for panel makers seeking for sustained growth in the small- and medium-sized panel market.