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DisplaySearch reports TFT-LCD market undersized in Q2'05

Posted: 13 Jul 2005 ?? ?Print Version ?Bookmark and Share


The TFT-LCD market was in shortage during Q2'05, according to DisplaySearch in its quarterly TFT-LCD supply/demand and capital spending report.

Still, the market is expected to be in relative equilibrium in Q3'05. A small surplus is expected in Q4'05 before the surplus widens significantly in 2006 on tremendous supply growth. However, the supply of certain components is not projected to grow at the same rate as TFT capacity, so actual output will be restricted by availability of components, leading to a narrower effective supply/demand balance and a healthier outlook for component manufacturers, the market research firm said.

DisplaySearch President Ross Young, stated, "The supply/demand situation improved more than expected in Q2'05 for large-area TFT-LCD suppliers on healthy unit growth and size mix shifts in most applications, as well as slower than expected supply growth due to challenges in ramping new fabs. This situation led to price increases that we expect to continue into Q3'05 resulting in a return to profitability for some suppliers in Q2'05 and an improved profitability outlook in the 2H'05. But the projected large increase in the 2006 surplus warrants caution on next year's TFT-LCD supplier profitability outlook."

Other highlights from the most recent report include:

  • 47 individual TFT-LCD fab investments will occur between Q1'05 and Q1'07. Of these, 30 are for new or existing a-Si TFT LCD fabs, primarily targeting large-area markets, and 17 are for low temperature polysilicon (LTPS) TFT-LCD fabs. Total AMLCD capacity is expected to rise more than 103 percent, from 7.6 million square meters in Q1'05 to 15.4 million square meters in Q1'07, an increase over the previous 9 quarter forecast range.

  • Demand for TFT-LCD monitors, TVs and other applications grew rapidly in 1H'05 on lower prices, strong price elasticity, a healthier PC market and a firmer global economy. Demand for all large-area applications is expected to be very strong, growing from 42.9 million units in Q1'05 to almost 64.8 million units in Q4'06, a 51 percent increase in two years.

  • Assuming component-restricted capacity, large-area panel supply was insufficient in 1H'05. This will loosen from Q3'05 through Q1'07, with the seasonal surplus expected to be up and down between -2.9 percent and +13.2 percent on a quarterly basis.

  • Since prices are related to actual output, not array capacity, a relatively firm supply/demand scenario is expected. Commodity 15-inch panel prices will rise in Q3'05 and then should decline at modest rates through Q1'07.

  • Total costs for a 60,000 substrate per month generation 7.5 factory are expected to be in the range of $3.2 billion.

  • The cumulative 2004-2006 AMLCD capital equipment spending forecast has been revised upward by 11.5 percent from $26.88 billion to $29.95 billion. 2004 represented a peak in the LCD investment cycle. 2005 spending is now projected to reach $9.89 billion. 2006 and 2007 are also expected to be weaker years, but the cyclical equipment market will likely show some gains thereafter.

  • Revenue ranking for the top 12 array process equipment makers from 2000 through 2005 is analyzed. In calendar year 2004, Tokyo Electron shipped approximately $768 million in AMLCD manufacturing systems, followed by Canon, Dai Nippon Screen, AKT and ULVAC.

  • Over the last few years, Taiwan-based panel manufacturers have been successful at raising capital through a variety of financial instruments; since 2003, the top five makers have raised over $16 billion. More financing programs are expected this year, and most manufacturers should be able to meet their funding goals.

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