MARKET & TECHNOLOGY
MARKET & TECHNOLOGY TRENDS DisplaySearch Indicates 22% of LCD TVs Outsourced in Q2'07 Display Market Research specialists DisplaySearch have released their Q2'07 LCD TV Value Chain Report, which states that 22% of the 16.1 million LCD TV units shipped in Q2'07 were made by external OEMs such as TPV, Jabil, AmTRAN, Quanta, Vestel and Wistron. Many LCD TV brands outsourced 100% of their LCD TV set manufacturing, such as Dell, Grundig, HP, Polaroid, Vizio, ViewSonic and Westinghouse. Philips outsourced more than 40% of its LCD TVs shipped in Q2'07 to OEM makers. Some brands intend to increase their outsourcing share for certain regions and products as the market expands, while Top Ten LCD TV OEM Set Manufacturers Rank other brands intend to bring more volume in-house as they expand into new regions. The LCD TV Value Chain Report tracks these trends by manufacturer. Trends include: • More than 900K of LCD TVs shipped in Q2'07 were adapted LCD monitor panels, including 15", 17", 19"W, 20"W and 22"W. Due to panel cost considerations, this will occur more frequently. LCD TVs under 26" will increasingly use LCD monitor panels, especially for wide products such as 19"W, 20"W and 22"W. LCD TV Subcontract Manufacturers 1 TPV (AOC) 19.9% 2 AmTRAN 17.4% 3 Proview 13.5% 4 Jabil 11.0% 5 Wistron 7.4% 6 Vestel 4.4% 7 Kolin (Digimedia) 4.3% 8 NexGen 2.1% 9 Quanta 2.4% 10 Xoceco 1.0% Total 100% Rank 1 LPL 2 AUO 3 Samsung 4 CMO 6 CPT LCD TV Module Makers Top Customers Philips, LGE, Panasonic, Toshiba, AmTRAN Sony, Samsung, Philips, Sanyo, Sharp Sony, Samsung, Panasonic, AmTRAN Samsung, Funai, Philips, LGE, TTE Samsung, LGE, Philips, Funai, Konka, TPV • 19.6 million LCD TV modules were shipped from TFT LCD makers, while LCD TV manufacturers shipped 16.1 million units. These variances were mainly due to supply chain, assembly lead time, buffer stocks and channel inventory. According to David Hsieh, Vice President of Display- Search, "DisplaySearch's indepth LCD TV Value Chain Report has quickly become an indispensable research tool for the TFT LCD industry. It's a comprehensive reference on the supply chain relationships between LCD TV module makers, LCD TV manufacturers and LCD TV brands." Market Share in Q2'07 (%) Top Five Customers' Unit Share 80% 55% 85% 46% 5 Sharp Sharp, Philips 100% 59% Projecting Success... Tracking Trends in the World and European Projector Markets The projection market in Europe is very hot at the moment, with a whole swathe of interesting new products here at IFA 2007. Chris Chinnock of Insight Media has been following the trends of the projection market worldwide for a number of years. We asked Chris to give us the run down on the latest movements in the sector... There are a few interesting trends. What TI is showing here with their “brilliant colour” is very interesting for the professional market for sure, and that is starting to filter up into the consumer market. Bringing better colour to a projection set is very interesting and it is a major trend. What they are showing here is also part of another trend, which is 3D. 3D is a very hot topic right now, and that is being driven in two ways. The main driver is coming from digital cinema, electronic digital cinema systems are going worldwide, particularly in the US. There will be over seven hundred 3D digital cinemas in the US this year, and that is a lot of theatres. That means there is probably one pretty close to most of the major cities or in most of them in the US now. (eds: see also interview on this subject page 6) It is the chicken and the egg problem as well, because in the past no one has really made 3D films because there was not enough 3D cinemas. Now that is going to change… Exactly right. I think that the kind of magic number for Hollywood is about four thousand 3D cinemas around 2009, and that is when we are going to see major releases in the market. There is a big message for retailers, because as we are seeing 3D DLP TVs coming out, this is a big argument for selling the 3D TVs. That is right, the awareness and quality of 3D is being established in the theatres. Now you can go in the stores and buy a DLP TV with 3D, and there will be other technologies coming into the market with 3D capability in both TVs and monitors. That is really important from a content point of view both from the Hollywood side as well as the gaming side. Is there any other novelty that you found interesting here? The other interesting technology in the market area that we have been tracking a lot is what we call the small categories, which are really small projection systems that can literally fit in your pocket and are based on LED sources and laser sources. So you are starting to see the first 3Dbased ones come to market now and they are reaching a critical level that is going to enable business and consumer applications. Top Customers' Share of LCD TV Module Makers' Shipments in Q2'07 (Unit Basis) 8 IFA International • Tuesday, 4 th September 2007
MARKET & TECHNOLOGY TRENDS The Health of the LCD monster Bob Raikes, Managing Director • Meko Over the last few years, the electronic display business has become totally dominated by what I call “The LCD Monster’’ Active matrix (TFT) LCDs, the full colour ones that are suitable for video, are everywhere. I think of the LCD monster as an octopus that has tentacles in almost every display application. Whether it’s a flat panel TV, a computer monitor, a mobile phone, a camcorder, a digital still camera, a notebook computer, a GPS or an MP3 player, there’s an LCD on it. It sometimes seems that every new consumer electronics device has a full colour LCD on it! As a result, the LCD monster is completely dominating the flat panel display market, with 82% of all the money being spent on flat panel displays spent on TFT LCDs in 2006, a cool billion according to US researchers, DisplaySearch. The remaining 18% is split between PDP, OLEDs, microdisplays (like TI’s DLP or Sony’s SXRD chip), or passive LCDs (the very low cost and low performance ones in cheap phones). On the one hand, this amount of money makes the LCD industry very strong, with huge sums available for research and development and production investment. On the other hand, it makes huge sections of the consumer industries dependent on the industry and on the health of the LCD monster. Until recently, the monster was sick. For one and a half years, until the last quarter or so, LCD makers have been losing money. There was too much production capacity and prices for LCDs had been falling. Lower LCD prices meant lower TV set prices, so there has been huge growth in the demand for LCD TVs and for bigger TVs. As a result of their losses, most LCD makers have had to cut their plans to boost production capacity. Only very large companies, such as Sharp and Samsung (along with its LCD investment partner, Sony), have had the money to keep building new factories, as the factories can cost billion or more. Smaller companies have had to delay their plans. As a result of these delays, there is a slowdown coming in the growth of LCD supply in the next year to year and a half. There will be new factories at the end of 2007 and early 2008, but supply growth will slow down during 2008. There’s a second factor that has become important. The LCD makers are increasingly dependent on the TV business, but the TV business is very seasonal. A lot of the sales for the year come around Christmas and the New Year. The huge US market has a traditional buying season from the November ‘Black Friday’ thanskgiving sales to the Superbowl. The Japanese have their bonuses, the Chinese have their New Year holidays and Europe has Christmas and New Year sales. As a result, TV set makers have to buy a lot of panels in the summer, to build into TV sets so that they can be in the stores by Christmas. At IFA this week, lots of TVs are being ordered for Christmas sales by retailers. So, there’s a peak in demand for LCDs at this time of year and there are now real shortages. We check inventory levels every month and at the beginning of August, 90% of the monitor makers that we spoke to had shortages, and almost all of the monitor market is LCD these days. But this year, there was a big growth in supply. Next year we expect the same peak, but without the growth in supply, so there’s likely to be a big crunch when there simply won’t be enough LCDs for everyone. It won’t be so good for consumers as the rapidly falling prices of TVs in the last couple of years will not be able to continue. It could also be bad news for the smaller brands that don’t have their own panel factories. On the other hand, it will be good news for the finance departments of the LCD monster and the PDP makers, who have been having a tough time recently. It should also mean that the LCD makers should be able to raise the huge amounts of money needed to build the next generation of LCD factories to boost up supply again. 2 As you can see from the graph, the rate of increase in LCD supply is slowing down over the next year or so. (source: Meko & maker’s announcements) LCD makers build factories of different generations that are optimised for different sized LCDs. This graph shows that by 2010, around 60% of the capacity of the LCD industry will be optimised for G6 and above, which means TV panels of 32” and more. IFA International • Tuesday, 4 th September 2007 9
