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Display makers look to cost reduction to rake in profit

Posted: 15 May 2015 ?? ?Print Version ?Bookmark and Share

Keywords:IHS? display manufacturer? mobile phone? tablet?

As selling prices of smartphone panels continue to decline, display manufacturers are now finding ways to cut production costs in order to maintain profitability, according to IHS Inc. For instance, 5in full-high-definition (FHD) mobile phone panels experienced a sharp YoY unit-shipment decline of 34 per cent last year, but manufacturing costs fell only 14 per cent. If current price trends continue, manufacturing costs for 5in FHD panels are expected to hit the break-even point by the end of this year, stated the market research firm.

"Prices for TV panels have remained relatively flat since last year, but smartphone panel prices have been continuously falling during the same period," said Jimmy Kim, principal analyst and researcher for IHS. "Growing numbers of panel makers are increasing their production allocations; however, in the current smartphone market, only mainstream and low-end products show any demand growth at all. Manufacturers are therefore looking at cost-saving measures, in order to bolster their bottom lines."

5in Full HD price and cost trend

(Source: Quarterly smartphone and tablet PC TFT LCD cost model report, IHS)

With smartphone panel prices falling, some panel makers are replacing low-temperature polysilicon substrates (LTPS) with oxide semiconductor substrates. Others are reducing costs, by introducing multi-chip LED packages, RAM-less driver ICs, composite optical sheets and other cost-effective component solutions.

Although panels for premium smartphones are becoming saturated, some panel makers are still expected to increase their capacity allocation for smartphone panels, since demand for mainstream and low-end products shows growth. This situation will, however, add pressure to lower prices for cost-competitive products.

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