The LCD modules market in the Greater China region continues to grow at an average annual rate of 20 percent. Because of very intense competition, small and mid-size manufacturers across the region have progressed from TN/HTN/STN passive matrix technologies to higher-end color STN (CSTN) and active matrix thin film transistor (TFT) technologies. Many of them, however, continue making a wide range of module products across the spectrum.
Of 160 makers located in the Greater China region, 120 of them can be found in Guangdong, Jiangsu, Fujian, Shanghai, Hebei, Liaoning and Jilin. Optical industry zones set up in these regions provide an excellent development environment for LCD module makers.
Mainland China's total LCD module production exceeded 2 billion units by the end of 2005 at only half of actual production capacity. Some large-scale makers enjoy the same level of strong manufacturing and R&D capability as their foreign counterparts.
Small and medium-sized LCD module applications in 2005 were concentrated in the areas of telecom, consumer electronics, automotive and industrial products.
Heavy market saturation also continues to have a dramatic effect on prices, as supply exceeded demand in the first half of 2006. The arrival of next generation panels is expected to decrease the rate at which prices are falling.
The following are some of the key findings in the report:
• The 42 companies in this compilation will account for about 50 percent of Greater China's total output in 2006. Their output is expected to grow by 62 percent from 697.3 million units in 2005 to 1.13 billion units in 2006.
• The companies' combined monthly capacity is estimated at 89.41 million units. Large-scale players account for 48 percent, with monthly capacities of at least 800,000 units.
• TAB, COB and COG will continue to be the most common technologies employed in LCD module manufacture.
• Mobile phones are driving the small-size, high-end segment of the market, which includes CSTN and TFT LCD modules. Flat panel LCD TVs are leading the large-sized LCD module market. LCD module R&D is focused on faster response time, higher resolution and lower power consumption.
Industry Background discusses the LCD module industry in mainland China, Taiwan and Hong Kong. It talks about the major manufacturing bases in the region, industry drivers and challenges, and export markets of the surveyed companies.
Industry Overview
The LCD modules market in the Greater China region continues to grow at a dynamic pace at an annual rate of 20 percent, driven by swift developments in the mobile phone, notebook, portable device, GPS and flat panel TV display markets.
Because of very strong competition, small and mid-size manufacturers across the region have progressed from basic low-end TN/HTN/STN passive matrix technologies to higher-end CSTN and active matrix TFT technologies.
On the mainland, the drop in TN/STN modules' share of the LCD module market of 20 percent, from 54 percent to 34 percent in 2005, coupled with TFT LCD modules' increased share of the market — doubling from 14 percent in 2004 to 28 percent in 2005 — reflects this trend, which continues in 2006. Graphics LCD module output in the CSTN and TFT segments is on steady ascent.
Many manufacturers, however, continue making a wide range of module products from low-end to high-end, which are used in portable and consumer electronics, household appliances, in-car applications and instrument panels.
Heavy market saturation also continues to have a dramatic effect on prices, with production exceeding demand in the first half of 2006. In Taiwan, prices for 32in panels have fallen 30 percent, while for 42in panels, they fell 20 percent. Prices for 2in TFT LCDs applied to mobile phones have fallen by as much as 25 percent.
In general, product development is still heavily focused on mobile phone and other small-size applications. Mainland export ratios of more than 60 percent of output rose 21 percent from 2005 to 2006. Low and medium-end LCD modules still occupy the bulk of these exports, but demand for high-end STN, CSTN, and TFT LCD modules is expected to alter export composition in the years to come.
Meanwhile, top Taiwan makers in the LCD module market are actively competing with other top players in the global arena. In the large-size panel industry, some Taiwan makers rank among the top 10 manufacturers of large-size panels worldwide, followed closely by a group of slightly smaller players. A significant number of them have opened next gen fab production lines delivering sixth, seventh and eighth generation display panels in the 32in, 37in, 42in, 47in and 52in range, while smaller companies are comfortable delivering 3.5G to 5G products.
Supplier Profile
AU Optronics Corp. (AUO)
AU Optronics Corp. (AUO) was formed in 2001 through a merger between Acer Display Technology Inc. (subsidiary of Acer) and Unipac Optoelectronics Corp. (subsidiary of UMC). The company manufactures and designs TFT LCD modules and LCDs in Taiwan. In April 2006, AUO merged with Quanta Display Inc.
AUO ranks third worldwide in large-size TFT LCD module production, accounting for 14.7 percent of all global supply for large-size TFT LCDs in 2005, according to research firm DisplaySearch. As for small- to medium-sized LCDs, the company ranks sixth in the world.
AUO produces and markets TFT LCDs in sizes ranging from 1.5in to 46in. Apart from its Taiwan facilities, AUO has offices in the United States, Japan, South Korea, the Netherlands and mainland China and some parts of Europe; and has over 28,000 employees worldwide. By the end of 2005, AUO acquired more than 3,300 patents worldwide. AUO ships 60 percent of its overall output monthly. Its major export markets include Asia, which absorbs 88 percent, and Europe and America, taking up 12 percent. AUO is also planning to penetrate the markets in Eastern Europe and Central and South America, particularly Mexico. Aside from being the headquarters, Taiwan is also AUO's primary export port.
Annual sales from all products reached US$6.6 billion in 2005 and US$3.97 billion in the first half of 2006. Of this, sales of TFT LCD module applied to TVs and mobile phones represent 48 percent; TFT LCD modules for notebook PCs account for 49 percent of AUO's sales in the second quarter of 2006.
With the start of 7.5G TFT LCD production in the fourth quarter of 2005, AUO is projecting sales of US$125 million in the third quarter of 2006 and US$156 million in the final quarter of 2006.
Manufacturing Capability
AUO has 11 factories located in Hsinchu, Taoyuan and Taichung in Taiwan, and Jiangsu and Xiamen in mainland China. Its facilities are ISO 14001- and OHSAS 18001- certified.
The company's Hsinchu factories are mainly for the production of 3.5G TFT LCD modules; the Taoyuan factories are for the 4G and 5G TFT LCD modules; and the Taichung factories are for the 6G and 7.5G TFT LCD modules. Mass production of 7.5G TFT LCD modules with dimensions over 40in is expected in the fourth quarter of 2006.
AUO utilizes TAB, COG and One Drop Fill (ODF) manufacturing and packaging technologies. Currently, 37in TFT LCD modules are the company's mainstream products, which represent about 12 percent of its total output.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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