Abstract
LCD monitors continued on the steadfast march toward the replacement of CDT monitors, pushing worldwide monitor shipment volume up 14.5% year-on-year to approximately 11.4 million units in the first quarter of 2003. Worldwide demand has also further driven Taiwanese LCD monitor shipments, spurring on a new high of over seven million units in the first quarter.
15" monitors remained the mainstream size in the first quarter; however, in pursuit of higher profit margins LCD panel makers have shifted to production of 17" panels, bringing about a shortage of 15" sizes. 15" panel prices thus experienced a slight increase, and with 17" panel prices comparatively stable, 17" monitor shipments saw a sharp rise.
In addition to a review of the worldwide and Taiwanese LCD monitor industries in the first quarter of 2003, this report will also examine the future prospects of 17" LCD monitors and the growing threats faced by Korean makers.
The Next Mainstream Size
Given that LCD modules comprise between 80% and 85% of total LCD monitor cost, panel price fluctuations greatly impact the prices of finished monitors. In the first quarter of 2003, panel prices saw a slight rise; however, as this increase was in a tolerable range demand was not adversely affected and the CDT monitor replacement effect continued.
Over the long term, LCD panel suppliers will be boosting capacity to cater to market demand and lower costs. As panel prices fall, LCD monitor prices will decline as well.
A major focus of speculation centers on the point at which 15" models will be replaced by 17" models. This turning point is heavily dependant on the alternate strength and weakness between replacement effects and monitor size shifts. At present, with the constant slide in PC prices, bundling 17" monitors is too expensive; 15" models are thus likely comprise the majority of the CDT monitor replacement market. A shift in sizes is mainly driven by price, and if replacement effects outweigh the effect of size shifts, a transition to 17" monitors as the mainstream size will be delayed.
Korean Makers' Branded Businesses Squeezed
Backed by a good share of the nation's industrial resources, Korea's chaebols have pursued a strategy emphasizing a high degree of vertical integration, extending the conglomerate over a number of industries. These makers have also leveraged such expansive resources to continually expand market share of their LCD monitor brands. However, in the future it will be difficult to simultaneously run contract manufacturing and branded manufacturing businesses. The future fate of Korean share of worldwide volume will be heavily dependant on the effectiveness of securing greater market share with branded monitors.
With the LCD panel industry flourishing, at present Taiwanese players are second only to Korean suppliers, and Korean monitor makers are gradually losing the advantage in supply previously enjoyed. Additionally, Japanese makers can no longer compete with Korean and Taiwanese players on cost, and have since withdrawn from LCD monitor production. Taiwanese makers enjoy firm relationships with suppliers and distributors, as well as technological support from Japan. Taiwanese monitor shipments can thus be expected to continue increasing in the future.