The production value of Taiwan`s flat panel display (FPD) industry reached NT$725.38 billion (US$21.98 billion at NT$33:US$1) in the first half of 2007, according to statistics released by the Industrial Economics & Knowledge Center (IEK) of ITIS (Industrial Technology Information Service & Promotion Project), a government-sponsored initiative for collecting and analyzing industry data.


Of the total amount, assembled FPDs made up NT$521.71 billion (US$15.81 billion), in which large-sized (over-10-inch) thin film transistor-liquid crystal display (TFT-LCD) panels accounted for NT$438.4 billion (US$13.28 billion), small- and medium-sized TFT-LCDs NT$47.65 billion (US$1.44 billion), and TN/super twisted nematic (STN) LCDs NT$32.9 billion (US$0.99 billion). Parts and components contributed NT$203.67 billion (US$6.17 billion), including NT$52.13 billion (US$1.58 billion) generated by color filters, NT$30.88 billion (US$935.76 million) by polarizers, NT$51.54 billion (US$1.56 billion) by glass substrates, and NT$69.13 billion (US$2.09 billion) by backlight modules.

Growth in Q2

FPD production for the second quarter of the year totaled NT$399.88 billion (US$12.12 billion), up 22.9% from the previous quarter. Assembled FPDs made up NT$290.58 billion (US$8.81 billion) of the overall amount, up 25.7%, while parts and components accounted for NT$109.3 billion (US$3.31 billion), up 15.8%.

Of the total value of assembled FPDs, large-sized TFT-LCDs, small- and medium-sized TFT-LCDs, and TN/STN LCDs contributed NT$245.18 billion (US$7.43 billion), NT$27.84 billion (US$843.64 million), and NT$16.2 billion (US$490.91 million), respectively, in second-quarter production value. The value of parts production includes color filters at NT$29.06 billion (US$880.61 million), polarizers at NT$16.56 billion (US$501.82 million), glass substrates at NT$26.76 billion (US$810.91 million), and backlight modules at NT$36.93 billion (US$1.12 billion).

Thanks to the efforts made by manufacturers to control capacity and clean up inventory, the oversupply of large-sized TFT-LCD panels that had plagued the industry for several quarters disappeared. The inventory cleanup was helped by increasing demand from makers of terminal product, who were stocking up in anticipation of future price hikes for panels.

A rising-price trend became apparent in the second quarter, as prices of monitors and notebook PC panels began climbing by 1% to 2% per month while prices of 20-, 26-, and 32-inch TV panels halted a year-long slide and started climbing again. Prices of 37- and 42-inch panels also stopped declining and stabilized. These conditions helped bring about a 26.9% growth in sales of large-sized TFT-LCD panels, according to ITIS-IEK.

Small- and medium-sized TFT-LCD panels also enjoyed a rare price hike in the second quarter thanks to a supply shortage brought on by a reduced capacity for small- and medium-sized panel production as manufacturers shifted to large-sized products, as well as by strong demand resulting from the introduction of new application products. The production value of these panels also increased compared with the first quarter, by a robust 41%.

The production value of organic light-emitting-diodes (OLEDs) for the cellphone sub-panel market has been declining-the drop reached 4.8% in the second quarter--because active-matrix (AM) OLED application technology has not adequately matured plus the fact that passive-matrix (PM) OLEDs cost more than their TN/STN counterparts. Some local AM OLED companies, however, have sent product samples to international cellphone makers for evaluation.

The increasing popularity of TFT-LCD panels in cellphone displays has put a squeeze on TN/STN products, which suffered a decline of 3.0% in production value in the second quarter. IEK-ITIS noted that some TN/STN panel makers have expanded into the production of TFT-LCD modules (LCMs), and most of those producers enjoyed growing revenue during the April-June period. Other manufacturers turned to other non-cellphone application markets, and most of them suffered minor revenue declines.


The Parts Sector

In regard to parts related to FPDs, IEK-ITIS reported that the Allied Material Technology Corp. stopped production in the second quarter, leading to a supply vacancy for color filters and a minor price hike for key parts. Despite Allied`s withdrawal, the value of local color filter production increased by 31% from the previous quarter.

Polarizer production value climbed 15.6% in the second quarter compared with the previous quarter, thanks to increased shipments of TFT-LCD panel shipments. This helped the production value of glass substrates to grow 8%. Production of backlight modules rose 14.7% during the same period.

Q3 Forecast

IEK-ITIS predicted that the panel supply shortage would ease gradually in the third quarter, in which Taiwan`s total FPD production value is expected to reach NT$438.99 billion (US$13.3 billion), up 9.8% from Q2. Assembled FPDs alone are expected to account for NT$318.34 billion (US$9.65 billion) of the overall amount.

Large-sized TFT-LCD panels, small- and medium-sized TFT-LCD panels, TN/STN LCDs, and OLED panels are expected to contribute NT$269.7 billion (US$8.17 billion), NT$30.9 billion (US$936.36 million), NT$16.3 billion (US$493.94 million), and NT$1.25 billion (US$37.88 million), respectively, to the total.

FPD parts and components are expected to achieve a total production value of NT$124.02 billion (US$3.76 billion), in the third quarter, up 13.5%, with the total including NT$32.54 billion (US$986.06 million) generated by color filters, NT$17.88 billion (US$541.82 million) by polarizers, NT$29.43 billion (US$891.82 million) by glass substrates, and NT$40.8 billion (US$1.24 billion) by backlight modules.

IEK-ITIS said that with the arrival of the peak buying season, major large-sized TFT-LCD panel suppliers in Taiwan are expected to continue enjoying revenue growth, averaging 10%, in the third quarter.

The shortage of small- and medium-sized TFT-LCD panels in the second quarter is expected to improve in the third quarter, when production value is forecast to increase 11% from the second quarter.

The third quarter`s OLED production value is expected to show a 5% increase, after some local AM OLED makers win product certification from cellphone makers and begin shipments.

The TN/STN LCD sector is expected to record a marginal 0.6% growth in the third quarter.

Addressing different sectors of the FPD parts industry, IEK-ITIS predicted that color filter production will grow by 13% in the third quarter due to the high-season effect and an upturn in prices for TFT-LCD panels. Polarizer production is expected to grow by 8% thanks to increasing demand from panel makers. Glass substrate production is forecast to increase by 10% to meet the demand from growing panel shipments. The center also predicted that the value of backlight module production will increase 10.4% this quarter because these modules have become a growing part of notebook PC makers` supply chains.
(by Quincy Liang)