June 10, 02

Already shipping record quantities, ( apart from Quanta Display ) the remaining four Taiwan TFT LCD makers have been operating at full capacity. Quanta is schedules to complete the capacity ramp-up of its production line shortly, from 30,000 substrates to 45,000 substrates monthly, and Chia Mei Optoelectronics, Taiwan's biggest company in the sector and aspiring to achieve world leadership soon, plans to increase its Fab II monthly capacity from 55,000 substrates to 75,000 substrates by the third quarter.

AU Optronics has begun installing equipment to expand its 3.5G L5 line's monthly capacity from 50,000 t0 60,000 substrates and its 4th generation L6 line's monthly capacity from 35,000 to 55,000 substrates.

Backed by strong demand and price hikes, Taiwan's TFT LCD producers recently predicted a complete turnaround in their sales and profits this year.

Finished products market situation:

Taiwan has put a lot of effort into consolidate its position as the world's leading manufacturing spot of TFT-LCD monitors, surpassing, for example, South Korea and Japan as the leading producer of flat panel displays.

According to a study, published by a market research firm DisplaySearch, Taiwan in the first quarter of this year took 41.1% of the world market with shipments of 33.57 million units. This compares to a 36.5% of the world market for South Korea and 19.4% for Japan. Out of the Taiwan companies, AU Optronics is the star performer, as its shipments of 1.11 million displays in the first quarter called for a world market share of 13.7%. Close on the heels are Chunghwa Picture Tubes Ltd. and HannStar Display Corp.

As profits in the sector have shamefully eroded to to oversupply in the past, the outlook seems to be better now, as computer manufacturers finally start to include flat screen displays as standard equipment in their systems, and consumers are warming up to the idea of paying a little more for a much more convenient display.

Order from Apple, for instance, has shot through the ceiling as the company rushes to fit its recently introduced Imac with flat panel screens.

"With an increasing number of vendors providing LCD monitors as standard equipment on PCs, demand is skyrocketing", said Victor Tsan, managing director of the Market Intelligence Center under the Institute for Information Industry.

Prifts in the sedrtor are also improving with increasing demand helping to support prices for LCD panels, which had plummeted to below US$250 per basic panel at the beginning of the year. Production costs are also expected to be lower as companies set up new generation plants.

The total global market is forecasted to be over US$22 billion for flat screen displays this year, of which an estimated 80% will be LCDs. A think tank, funded by the Taiwan government further said LCD monitor4s are like to be the most important sector of Taiwan's IT hardware this year.

One factor helping out Taiwan's industry is a falling preeminence of Japan, the LCD industry of which is squeezed by labour costs that are triple that of countries such as South Korea. And while some Japanese giants such as Sharp are still in the game, many have started to outsource to the major Taiwan companies.

Korean and Taiwan makers to introduce larger-sized displays

Attracted by much better profit margins, Taiwan and South Korean TFT LCD firms have launched many larger sized displays and substantially increased shipments since end of last year.

However, system integrators and other market partners do not necessarily match this enthusiasm, as most LCD monitors still have 15-inch panels. If predictions for the proliferation of larger-sized panels are to become the market mainstream, their production cost needs to be further reduced and supply substantially increased.

South Korean firms pose a great strategic challenge, as they are focusing on the more profitable 17-inch and higher sector, while most Taiwan-based LCD makers still cling to the standard 15-inch models. Currently, the two largest producers of TFT-LCDs are both Korean; LG-Philips LCD, and Samsung.

Samsung, for instance, began in February this year volume production of a 19-inch TFT-LCD, featuring an SSXGA resolution, that is 1,280 x 1,024 pixels; a 5:4 aspect ratio, a brightness of 2.50 cd/square meter, and a 170 degree viewing angle.

Taiwan aims for 5G production in 2003

The life cycle of newer generation of TFT LCD production lines is shortening - from the third generation ( 3G) line's life cycle of 6 years to the 4G of 4 years, and now to an estimated 3 years for 5G-lines.

Keeping pace with the world's development, four Taiwan TFT LCD producers are building 5G TFT LCD production lines and plan to begin volume production at the lines sometime next year.

Taiwan TFT LC makers moving back-end production to China

Since the Taiwan government decided to permit Taiwan companies to build TFT LCD back-end module plants in China, Taiwan's have quickened their moves to China.

Chunghwa Picture Tubes reportedly complete construction of an LCM factory in Wujian, Jiangsu Province, and began volume production of 14.1 and 17-inch TFT LCD modules in mid April.

AU Optronics is reported to soon complete equipment installation for its LCM factory in China.

HannStar decided in May to invest US$20 million to take over an LCM factory investment project at Nanjing.

Walsin Group began last November construction of an LCM factory of 200,000 module monthly capacity in Nanjing,

Chia Mei Optoelectronics reportedly has visited Suzhou, Shanghai, Qingdao and Beijing, searching for a suitable location to build an LCM factory in China.

China LCD industry developing rapidly

Thirty Chinese LCD companies, with total investments of US$580 million and a total workforce of 18,800, produced 28 million units of mainly small-sized TN, STN and TFT LCD panels, in 2000, according to the China Liqui Crystal Display Industry Association.

China has about 60 LCD producers, including 18 to 20 foreign-invested companies, and its LCD is developing very rapidly. Many companies either plan to build or are building new production lines for STN LCDs, both monochrome and color, and TFT LCDs, targeting PDA and mobile phone applications.

Attracted by China's great market potential, many major international LCD producers have been establishing production bases in China. Restricted by the Taiwan government's investment policy, Taiwan producers` investments are concentrated in TFT LCD module and STS LCD production.

Here is, in short form, a glimpse of what is happening in China at the moment:

NEC and SVA Electronic formed a TFT LCD joint venture in China, which, according to sources in Taiwan, plans to build a 5G TFT LCD production line. Of 45,000 substrates monthly, with the line scheduled to begin production in the 1st quarter of 2004.

Royal Philips Electronics announced in February the opening of an STN LCD factory in Pudong, Shanghai.

The shareholders of Beijing ORIENT Electronics in January approved investing a US$22,5 million to form a joint venture with South Krea-based Semicon Engineering and Hynix Semiconductor to acquire Hynix`s three STN LCD production lines.