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LCD equipment market poised for 2010 rebound

Posted: 09 Nov 2009 ?? ?Print Version ?Bookmark and Share

Keywords:LCD? LCD equipment market? panel display?

TFT LCD equipment spending reached a record high in 2008, but the combination of the worldwide economic crisis and the downside of the crystal cycle are causing the equipment segment to suffer its largest drop ever in 2009, with revenues falling 50 percent y-on-y. But the equipment market is resilient, and DisplaySearch forecasts 51 percent growth in 2010.

"The worst of the worst crystal cycle in the history of LCDs certainly has passed," stated Charles Annis, DisplaySearch VP of manufacturing research. "Rapid panel price declines from the end of 2008 through the spring of 2009 helped push demand further than expected. Additional strong demand from China is now encouraging panel makers to move forward with capacity expansions in 2010."

For the second consecutive quarter, Q3 09 improved significantly by all metrics. Specifically, the DisplaySearch supply/demand index fell into the tight zone below 10 percent and average industry utilization rose to 88 percent. In Q3 09 most TFT LCD makers were profitable, with some reaching profit margins as high as 15 percent. However, the LCD industry remains inherently cyclical and is expected to be burdened by over-capacity and lower prices during the seasonally weak quarters Q4 09 to Q1 10 before recovering to healthy levels in the spring of 2010.

China is rapidly becoming the largest consumer of LCDs and has the potential to propel the LCD industry further. Although it currently only accounts for a 3.7 percent share of total TFT LCD capacity, this is expected to grow steadily to 7.4 percent in 2012 and even higher beyond, as multiple foreign and local Chinese panel makers are planning Gen 7 and 8 fabs.

TFT LCD manufacturing equipment market

"Q3 09 was good for most LCD materials suppliers and panel makers. But now the industry is moving into a 'wait and see' mode, cautiously planning long lead time capacity expansions, evaluating whether the global economy and LCD demand are back on a growth curve and if China will be able to meet continuously increasing expectations," Annis added.

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