Aug 9, 2000

Taipei - - Taiwan has come a long, or maybe more precise, a short way from the days where the production value-added of portable computers was low due to the fact that key components, and especially the expensive TFT-LCD displays, had to be imported from Japan. Taiwan's self-sufficiency in these compents has increased ever since with the related manufacturers announcing big plans for future developments and export performance in a market that has become highly competetive.

With a TFT.LCD- manufacturing capacity expanding since the third quarter of last year, Taiwan is expected to take up 25 percent of the world market in 2001, said an industrial analyst at the government-funded Industrial Technology Research Institute (ITRI).

Currently, Taiwan's manufacturers accound for only 7 percent of the world market, but the market share is expected to grow to around 18 percent by year-end due to the rapid expansion of companies in ths line, and will hopefully challenge the 25 percent market next year.

Chen Mao-cheng, an industrial analyst at ITRI, predicted that the global demand for TFT-LCD panales will grow dramatically in the next few years due to the rising demand for portable information appliances (IA), mobile phones, digital TV sets, and advanced models of computer monitors.

Samsung started their price war for the same item at the end of the second quarter. Prices in July were already under US$ 850.- from between US$ 950 - 1,000 previously. Although the production of 17-inch display panels has just begun in Taiwan, local companies decided to follow the price-cutting maneur at the expense of their profits.

Since 1998, a number of Taiwan companies, optimistic about the world market potential, have been actively engaged in producing TFT-LCD pnales. The annual output was worth only 13 billion Taiwan dollars in 1999, but is expected to exceed 90 billion Taiwan dollars this year. The Acer group is now the largest manufacturer of these components in Taiwan, accounting for 23,4 percent of the total. There are currently seven TFT-LCD manufacturers in Taiwan.

Chen Mao-cheng of ITI said that Taiwan's investments in these production lines will accumulate to 364 billion Taiwan Dollars for the four year period from 1998 to 2001, of which 90 percent will be used to produce FTF-LCD panels. "We originally estimated that Taiwan would take at least 30 percent of the world market by 2005, but it may be able to reach this goal in 2003 already given the continous growth of production", he said.

To cope with the rising world demand, he added, Taiwan, Japan and South Korea all have been actively expanding their TFT-LCS manufacturing capabilities in an bid to expand their share in the growing global market. Among them, Taiwan is now the world's third largest supplier, trailing Japan and Korea. However, Taiwan has been in ths field for three years only, compared to Japan's then and Korea's seven years.

Chen, however, warned that Taiwan's manufacturing industry expanded too fast over the past two years, because it cannot cope with a growing shortages of trained staff. He urged makers to upgrade their manufacturing technologies to sharpen their international competetiveness .

Meanwhile, Taiwan companies follow the price-cutting strategy of South Korea's Samsung Electronics, which lowered the price of their 17-inch thin film transistor liquid crystal display flat-panel monitors to under US$ 850.-

The heated price war has pushed Taiwan companies to their price below US$ 900.- accordingly. Prices are expected to further drop below US$ 800.- by year's end, while stimulating market demand, analysts said in Taipei.

Industry exppers said Samsung had decided to drop the production of 14.1 inch panels to provide greater capacity of the 17-inch panels in order to stimulate demand for the latter and to heighten the entry threshold for Taiwan.

The 17-inch model is actually a new product to the world. Samsung only started mass production in June, and Taiwan companies even later, with some of them still at the sampling stage at that time.

Because of it's advance timing, Samsung is expeced to face fewer drawbacks in the price war that it's Taiwan rivals, who are just beginning to deliver bulk orders and have a relatively low yield rate.

As for complete monitors, analysts expect that prices for 17-inch models will drop to below US$ 1000.- by the end of this year, since the TFT-LCD display constitutes 80 percent of the cost of the monitor. The delivery time for the displays is 3-1/2 to 4-1/2 months at the moment.

Performance of individual companies

Acer Display Technology Inc was Taiwan's No. 1 maker of TFT-LCD panels in the first half of 2000, delivering about 520,000 panels during the period. The company predicts total sales of 1,7 million units, worth about US$ 726 million, by the end of this year.

Chen Hsien-bing, the firm's president, comments that the second half of the year is the traditional high season for Taiwan's information and electronics industry, where 70 percent of annual sales take place.

Acer Display was one of the two local companies to beginn mass production of TFT-LCDs Las year ( the other was Chung Hwa Picture Tubes ), but newcomers like Chi Mei Electronics Corp., Unipac Optoelectronics Corp. and Hann Star Display Corp. flooding in later.

Acer currently turns out mainly 13,3-inch and 14,1-inch panel for notebook PCs, but has begun trial delivery of 17-inch models already.

Chung Hwa, the second-largest manufacturer in the line, turned out 428,800 panels in the first half.

Chi Mei, the only Taiwan TFT-lcd maker not reliant on outside help for basic TFT-LCD technology, has a 3rd generation production line that turns out extra-large glass substrates of 620 mm x 750 mm, which are mostly used for making 14.1- inch panels for notebook PCs. With sales of 80,000 large-sized panels in July, Chi Mei's revenue surpassed the 1 billion Taiwan dollar mark for the first time, Hsu Tin-chien, vice president of the firm said last week.

Presently, Chi Mei delivers 15-inch panels to Fujitsum of Japan, with other international brand names having placed orders, the vice president added.

Texas Instruments of the U.S. has guaranteed to supply one million driving Ics to Chi Mei with in this year.

Chi Meis chairman Hsu Wen-lung predicts that his company will be the world's foremost TFT-LCD producer by the end of 2001, an opinion not shared by some local analysts.