Abstract
The global TFT-LCD panel industry consists of a small number of manufacturers,
substantially all of which are based in Asia. The top ten TFT-LCD panel
manufacturers of large-sized panels in terms of unit sales accounted for 95.7%
of global sales in the first three quarters of 2005. All of these
manufacturers are based in Asia. In recent years, TFT-LCD panel manufacturers,
in particular Taiwan- and Korea-based manufacturers, have invested heavily to
establish, construct and ramp up additional fab capacity. The capital
intensive nature of the industry often results in TFT-LCD panel manufacturers
operating at a high level of capacity utilization in order to reduce unit
costs. This tends to create a temporary oversupply of panels, which reduces
the average selling price of panels and puts pricing pressure on display
driver companies.
Since the 1990s, a pitched battle for supremacy in thin-film transistor liquid
crystal displays (TFT-LCDs) has been fought between Taiwan, Korea, and Japan.
This rivalry is not simply a matter of pride: its outcome will also be a
decisive factor in the development of Taiwan' s high-tech industry over the
next ten years. Though Taiwan was a relative latecomer to the battle, it has
progressed quickly. As Japan withdrew from the race for production capacity, a
two-way battle between Taiwan and Korea became increasingly evident.
In the late 1980s, as the Japanese bubble economy collapsed, the consequent
depressed economic conditions made it difficult for Japanese companies to
raise funds and expand production. Just at that point, Taiwanese companies
with excellent access to capital made their entry, and Japanese companies
began transferring technology to Taiwan through strategic alliances, in the
process deciding the fate of Taiwan' s TFT-LCD industry. Today, the "five
tigers" of Taiwan' s flat panel industry-AU Optoelectronics, Chi Mei
Optoelectronics, Chunghwa Picture Tubes, Quanta Display, and HannStar
Display-all maintain close technological cooperation with their chosen
Japanese partners.
From 2002, the rivalry between Taiwan and Korea to best each other in
production capacity emerged. Taiwanese vendors expanded production capacity
more aggressively, and it is projected that at the end of this year, more than
five fifth-generation and three sixth-generation production plants will be
located in Taiwan. Though the fact that the newer the design of the factory,
the larger the LCD screens that can be produced, can help reduce costs, the
real competition is turning out to be in seeing who has the deeper pockets.
Since 1999, when the Japanese transferred key technologies to Taiwan, major
vendors have continually been making moves to raise capital both domestically
and abroad, ensuring an uninterrupted flow of investment over the past few
years.
Currently Taiwan' s biggest rival is Korea. Korea entered this industry six
years before Taiwan. It has greater upstream and downstream integration, and
greater self-sufficiency. Korea also benefits from the brands and global
channels of market leader Samsung and of Philips LG. These factors make
Korea' s flat panel industry far more complete than Taiwan' s.
Besides South Korea with the breadth of its downstream and upstream
integration, and Japan with its cutting-edge technology and strong brands,
China has been making moves in recent years. China will likely turn the flat
panel industry into a four-way battle.
Mainland China is expected to see the establishment of at least five 5G and
four 3.5G TFT-LCD lines by 2008. At present, there are only two 5G TFT-LCD
lines in the mainland. The first one is operated by BOE Technology Group Co.
Ltd and the second by Shanghai SVA-NEC Liquid Crystal Display Co. Ltd.
While Japanese manufacturers enjoy a sound industry structure, lack of capital
for further investment in new plants makes it difficult for Japanese makers to
exploit this advantage to the fullest. Faced with competition from Taiwan and
South Korean manufacturers, Japanese manufacturers are likely to leverage
their existing competitive advantages in technology, patents and branding to
deepen their collaborative relationships in mainland China. While they will
run the risk of losing technology to others, the capital gained through
strengthening their position in brand and distribution will allow Japanese
manufacturers to direct the development of next-generation products.
While Taiwan manufacturers have been able to rapidly secure a large market
share in the global TFT-LCD panel industry due to their strong position in the
system integration sector, as companies move production to mainland China
there will be less need to purchase components produced in Taiwan. To counter
this looming decrease in market share, Taiwan makers are likely to develop
technology and supply capabilities in semiconductor, core materials and basic
materials, as well as leverage certain cultural and language advantages to
expand branding and distribution in mainland China. Taiwan manufacturers will
thereby increase the amount of influence they are able to exert within the
industry.
By exploiting warmer relations with mainland China than Taiwan enjoys, South
Korean manufacturers can deepen their supply system in mainland China. They
will then be able to stave off competition from Taiwan manufacturers.
This technology-marketing report examines and projects the technologies
involved in the fabrication of Liquid Crystal Displays (LCD). This report
discusses the technology trends, products, applications, and suppliers of
materials and equipment. A market forecast for AMLCD equipment and materials
is presented.
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