Impact of Import Duty Issues on Future Development of Display Panel Makers
Regarding China, as the share of cell panel sales to China by Taiwanese makers is still low, the overall impact on them is expected to be limited at present. However, if this cell panel sales share will grow in the future, this could change. As for key components, Taiwanese manufacturers' supply chains are relatively complete, and the impact of import duty issues is expected to be small. Japanese makers are more circumspect in their use of components, and will not easily use other component makers' products. They therefore mainly import these components, and could therefore see a more significant impact from the import duty changes.
Looking at Europe, with the possibility of upward adjustments in LCM import duties, the impact will be more pronounced for Taiwanese makers which entered Europe relatively late. Although it can be expected that deployment in Eastern Europe of manufacturers with large TV panel shipments will accelerate, overall assessments still have to be made which take into account the type of clients and cost structures of manufacturers. For panel makers without European downstream TV clients, the operational costs of setting up facilities in Europe will be too high and in the short term these companies are not expected to invest in this region.
Client Portfolio Plays Important Role in LCM Makers' Deployment
From LCM makers' global deployment one can see that this deployment is closely related to their corporate development strategies. Samsung, LG Display, and Sharp all have their own TV brands or control orders from first-tier TV brands, and have therefore established production facilities in Eastern Europe ranging from LCM to TV assembly.
Regarding AUO, as the company does not have its own TV brand, in the past it only used Qisda's production capacity in Eastern Europe. After it won orders from first-tier brands, its TV panel shipment volume has increased. In order to maintain steady shipment to Europe, the company had no choice but to adopt a strategy whereby it would move closer to its customers in order to better serve them. In terms of timing of deployment in Eastern Europe and strategic considerations, there were differences with Japanese and Korean manufacturers.
If panel makers have relatively many non-first-tier TV vendor clients, they will have different strategic considerations. Looking at CMO's choice for Vietnam to set up a facilities, compared to AUO, CMO has mainly second-tier clients in the TV segment. Assembly facilities of these clients are still mainly located in China and Southeast Asia. Considering costs and service to clients, Vietnam has become a primary choice.
Furthermore, manufacturers with relatively small TV panel shipment volumes or which lack first-tier brand support, will cooperate with SI companies for back-end module production. For example, CPT uses Tatung, and CMO makes use of TPV's LCM capacity in Europe. Due to client portfolio, cost and efficiency considerations, these companies in the short term will not choose to directly set up LCM facilities in Eastern Europe.
Therefore, client portfolio is an important consideration for worldwide deployment of panel makers' back-end assembly operations. Particularly for customized TV products, moving closer to end-markets not only helps to save transportation costs but also brings them closer to downstream clients and actual market demand.