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TFT LCD components face critical market changes

Posted: 23 Mar 2009 ?? ?Print Version ?Bookmark and Share

Keywords:market components changes? TFT LCD? revenue decline?

There are two critical changes in the TFT LCD materials and components market in 2009: declining revenues and drastic changes in the structure of the components market. This is according to DisplaySearch's 1H 09 Semi-annual TFT LCD Materials and Components Report.

For the first time, the TFT LCD component and materials market will see a decline in revenues. In 2009, revenues will be $49 billion, an 8 percent decline from 2008. In 2H 08, TFT LCD makers reduced capacity utilization and shipments, which led to a reduction in the demand for materials and components. Meanwhile, panel makers are holding inventories at very low levels, which keeps materials and components makers' fab utilization lower than TFT LCD makers. This lower utilization has pushed component prices down sharply, and it is expected to continue through 2009.

Table 1 shows revenue changes for each of the major TFT LCD components from 2008 to 2009. Among them, the most serious declines are in materials such as photo spacers, PCB and other LCD module components, as well as the backlight unit. The PCB industry is facing a serious over-supply situation in 2009 due to weak demand from consumer electronicsdriving PCB prices down rapidly. Panel makers' aggressive activities in restructuring the LCD module are creating pressure for LCD module component makers in both demand and price.

Furthermore, panel makers are revamping the backlight unit structure and optical film stacks to reduce LCD module cost and to address the growing consciousness for green panels. Many backlight components have been influenced by the backlight price erosion such as prism sheet, micro lens film, diffuser film, reflector films and CCFL.

DisplaySearch's 1H 09 Semi-annual TFT LCD Materials and Components Report indicates several important trends for components and materials market:

??The vertical integration of panel makers continues at a rapid pace. The most recent example is Samsung's involvement in LED manufacturing.

??Pressures on profit margins throughout the supply chain are leading smaller materials and components makers to retreat from the market. This will introduce component shortages when panel makers are gearing up the capacity utilization again.

??Depreciation of the Korean Won and appreciation of the Japanese Yen have led panel makers to purchase more domestic components and to ask to change currencies in transactions with foreign suppliers.

??Competition in materials and components is becoming more vigorous. Component manufacturers are making more efforts to reduce costs such as improving yield rate, controlling losses in the manufacturing process and making adjustments to the speed of production lines.

??Global petroleum and metal prices have fluctuated rapidly, which has influenced the price of many TFT LCD materials, such as PET, TAC and PVA films, as petroleum and metals are used in manufacturing TFT LCD components.

The most serious declines are in materials such as photo spacers, PCB and other LCD module components.

According to Yoshio Tamura, vice president of DisplaySearch and the leader of the FPD component and cost research team, "2009 is definitely the most challenging year for the TFT LCD component and materials industry. The pressure is coming not only from the price erosion, but also from the drastic structural and technical changes in the industry. Some components have been enjoying comparatively better profits in the FPD supply chain, but this will possibly change in 2009."

Tamura added, "Despite this, we believe the situation will improve after these drastic changes occur, as the industry will gain new growth momentum with the resurgence of panel demand. Meanwhile, these new structural changes and technical advances will also help to stabilize component makers' profitability in the long term. We expect the component market will be showing positive growth again in 2010."

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