Taiwan Getting Out of Global PDP Game
Dec 09, 2005 Ι Industry In-Focus
Ι Electronics and Computers Ι By Quincy, CENS
Taiwan is losing ground in the plasma display panel (PDP) TV arena amid fierce competition from strong rivals in South Korea and Japan, and the island's existing players in the sector are not expected to offer next-generation PDP TV products, according to local industry sources.
Chunghwa Picture Tubes, Ltd. (CPT), a leading PDP panel producer in Taiwan, points out that PDP panel manufacturers here lack a local, comprehensive parts supply chain. Taiwan's domestic market also lacks sufficient demand for Chunghwa to achieve a manufacturing scale of economy here, so the company will gradually reduce PDP panel production on the island and will look for proper investment opportunities in mainland China instead.
Industry sources comment that the Taiwan government has actively been helping to develop the island's semiconductor and flat panel display (FPD) industries, but has concentrated so many resources on the thin film transistor-liquid crystal display (TFT-LCD) sector that it has been unable to also develop the PDP panel sector. As a result, they explain, the local PDP panel line is stagnating while Japanese and South Korean rivals race ahead with new products.
Statistics compiled by DisplaySearch, the worldwide leader in FPD market research and consulting, show that the global demand for PDP TV panels is expected to reach from 6.6 million to seven million units, and that the volume is expected to grow to nine million to 10 million units in 2006 and to 14 million units in 2007.
Kim Mei-jing, a South Korean industry analyst for the Industrial Technology Intelligence Services (IT IS) project sponsored by Taiwan's government, analyzes that the technical level of local PDP panel makers has fallen behind the level in Japan and South Korea for two to three years. Kim believes that local PDP manufacturers have "almost no chance for future business development," due to delayed investments and lagging production techniques.
According to Kim, the PDP development of Taiwan's two major suppliers, CPT and Formosa Plasma Display Corp., has nearly been halted due to the reluctance of their Japanese partners to release newer manufacturing technologies.
From a manufacturer's viewpoint, James Wu, CPT's chief financial officer and vice president, says that the local PDP panel line did not successfully form an industry cluster or build a sound infrastructure, and that the limited domestic market demand has also hampered the healthy development of the displays in Taiwan. CPT has decided to gradually decrease its PDP production, but will maintain its core techniques and production ability in order to seek future opportunities across the Taiwan Straits, Wu says.
CPT gained its PDP-related techniques from Japanese partner Mitsubishi Electric, while Formosa Plasma was assisted by Fujitsu Hitachi Plasma Display Ltd. (FHP), a joint venture established by Fujitsu and Hitachi. However, both of the Taiwan companies received only first-generation old production-line equipment from their Japanese partners, while world-class PDP makers, such as Matsushita of Japan and LG of South Korea, began manufacturing with third-generation equipment.
CPT currently has a monthly capacity of about 7,000 PDP panels, but recent actual production volume has dropped to only about 1,000 to 2,000 units, and the company may reduce monthly output even more.
CPT's Wu, however, is still optimistic about the future development of his company's PDP business in mainland China because CPT is currently the only Chinese-run company that possesses all of the technologies needed for PDP fore-section production.
Missed Chances
The road ahead is getting increasingly narrow and difficult for Taiwan PDP panel makers, industry sources say. However, like PDP panels, TFT-LCD panels can also be used for large sized TVs. The sources suggest that Taiwan should concentrate its available resources on the development of the TFT-LCD sector in order to improve the island's manufacturing competitiveness.
Several years ago, when all of the interested players in Taiwan, Japan, and South Korea were crowded at the PDP starting line, Taiwan's government and some private enterprises initiated a PDP industry alliance aimed at forming an industry cluster on the island, similar to the current local TFT-LCD cluster. The PDP cluster failed to develop, however, as most of the available resources were focused on the TFT-LCD sector, and most related governmental, academic, and research units stopped working on PDP.
Most of those in Taiwan's display panel industry considered PDP to be an out-of-date, or intermediate product, but global PDP TV demand has been increasing at a high speed and PDP product pricing has risen to profitable levels. PDP TVs have taken on a major role as digital TV broadcasting becomes more prevalent, because high-definition digital content requires large-sized, high picture-quality displays for optimal viewing.
Industry sources point out that Japanese PDP manufacturers have stopped releasing updated PDP technology in recent years, which has hurt local players, because the amount of investment required by PDP plants is much lower than that for TFT-LCD panel facilities. Currently, LG uses a manufacturing technique whereby one substrate produced at its most advanced production line is cut into eight 42-inch PDP panels. Matsushita produces a large substrate that is cut into six panels, achieving a similar economy of scale.
Compared with major rivals in South Korea and Japan, according to David Hsieh, president of the DisplaySearch's Taiwan Office, Taiwan companies with limited resources don't have the ability to simultaneously pursue the TFT-LCD and the PDP businesses. In addition, he adds, the global PDP panel market is dominated by big South Korean and Japanese players, leaving little room for others.
Chunghwa Picture Tubes, Ltd. (CPT), a leading PDP panel producer in Taiwan, points out that PDP panel manufacturers here lack a local, comprehensive parts supply chain. Taiwan's domestic market also lacks sufficient demand for Chunghwa to achieve a manufacturing scale of economy here, so the company will gradually reduce PDP panel production on the island and will look for proper investment opportunities in mainland China instead.
Industry sources comment that the Taiwan government has actively been helping to develop the island's semiconductor and flat panel display (FPD) industries, but has concentrated so many resources on the thin film transistor-liquid crystal display (TFT-LCD) sector that it has been unable to also develop the PDP panel sector. As a result, they explain, the local PDP panel line is stagnating while Japanese and South Korean rivals race ahead with new products.
Statistics compiled by DisplaySearch, the worldwide leader in FPD market research and consulting, show that the global demand for PDP TV panels is expected to reach from 6.6 million to seven million units, and that the volume is expected to grow to nine million to 10 million units in 2006 and to 14 million units in 2007.
Kim Mei-jing, a South Korean industry analyst for the Industrial Technology Intelligence Services (IT IS) project sponsored by Taiwan's government, analyzes that the technical level of local PDP panel makers has fallen behind the level in Japan and South Korea for two to three years. Kim believes that local PDP manufacturers have "almost no chance for future business development," due to delayed investments and lagging production techniques.
According to Kim, the PDP development of Taiwan's two major suppliers, CPT and Formosa Plasma Display Corp., has nearly been halted due to the reluctance of their Japanese partners to release newer manufacturing technologies.
From a manufacturer's viewpoint, James Wu, CPT's chief financial officer and vice president, says that the local PDP panel line did not successfully form an industry cluster or build a sound infrastructure, and that the limited domestic market demand has also hampered the healthy development of the displays in Taiwan. CPT has decided to gradually decrease its PDP production, but will maintain its core techniques and production ability in order to seek future opportunities across the Taiwan Straits, Wu says.
CPT gained its PDP-related techniques from Japanese partner Mitsubishi Electric, while Formosa Plasma was assisted by Fujitsu Hitachi Plasma Display Ltd. (FHP), a joint venture established by Fujitsu and Hitachi. However, both of the Taiwan companies received only first-generation old production-line equipment from their Japanese partners, while world-class PDP makers, such as Matsushita of Japan and LG of South Korea, began manufacturing with third-generation equipment.
CPT currently has a monthly capacity of about 7,000 PDP panels, but recent actual production volume has dropped to only about 1,000 to 2,000 units, and the company may reduce monthly output even more.
CPT's Wu, however, is still optimistic about the future development of his company's PDP business in mainland China because CPT is currently the only Chinese-run company that possesses all of the technologies needed for PDP fore-section production.
Missed Chances
The road ahead is getting increasingly narrow and difficult for Taiwan PDP panel makers, industry sources say. However, like PDP panels, TFT-LCD panels can also be used for large sized TVs. The sources suggest that Taiwan should concentrate its available resources on the development of the TFT-LCD sector in order to improve the island's manufacturing competitiveness.
Several years ago, when all of the interested players in Taiwan, Japan, and South Korea were crowded at the PDP starting line, Taiwan's government and some private enterprises initiated a PDP industry alliance aimed at forming an industry cluster on the island, similar to the current local TFT-LCD cluster. The PDP cluster failed to develop, however, as most of the available resources were focused on the TFT-LCD sector, and most related governmental, academic, and research units stopped working on PDP.
Most of those in Taiwan's display panel industry considered PDP to be an out-of-date, or intermediate product, but global PDP TV demand has been increasing at a high speed and PDP product pricing has risen to profitable levels. PDP TVs have taken on a major role as digital TV broadcasting becomes more prevalent, because high-definition digital content requires large-sized, high picture-quality displays for optimal viewing.
Industry sources point out that Japanese PDP manufacturers have stopped releasing updated PDP technology in recent years, which has hurt local players, because the amount of investment required by PDP plants is much lower than that for TFT-LCD panel facilities. Currently, LG uses a manufacturing technique whereby one substrate produced at its most advanced production line is cut into eight 42-inch PDP panels. Matsushita produces a large substrate that is cut into six panels, achieving a similar economy of scale.
Compared with major rivals in South Korea and Japan, according to David Hsieh, president of the DisplaySearch's Taiwan Office, Taiwan companies with limited resources don't have the ability to simultaneously pursue the TFT-LCD and the PDP businesses. In addition, he adds, the global PDP panel market is dominated by big South Korean and Japanese players, leaving little room for others.
Table 1:
| Global PDP Panel Shipment (First Three Quarters 2005) | |
| Company | Market Share |
| Samsung SDI | 31% |
| LGE | 27% |
| Matsushita | 23% |
| Pioneer | 9% |
| FHP | 9% |
| Others | 1% |
| Total | 100% |
| Note: The total PDP-panel shipment in the first three quarters was 4.5
| |
Table 2:
| Global PDP TV Shipment (First Three Quarters 2005) | |
| Company | Market Share |
| Matsushita (Panasonic) | 25.6% |
| LGE | 15.7% |
| Samsung | 13.3% |
| Philips | 10.3% |
| Hitachi | 6.5% |
| Pioneer | 6.0% |
| Others | 22.5% |
| Total | 100% |
| Note: The total PDP TV shipment in the first three quarters was 3.6
| |
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