TFT-LCD manufacturers still suffering from falling prices

By Alfred Lee, The China Post

Taiwan’s exporters of TFT-LCD are shedding blood, with the six major manufacturers estimated to suffer a total lose of around NT$13.7 billion for this year, according to H.B. Chen, chairman of the Taiwan TFT-LCD Association, in a recent speech to industry insiders. The largest TFT-LCD (thin film transistor liquid crystal display) maker, Acer Display Technology, Inc. is expected to register a pretax loss of NT$2.358 billion this year, and the third largest maker, Unipac, will also suffer a pretax loss of NT$1.4 billion. Chunghwa Picture Tubes, the first company to set up TFT LCD production lines in Taiwan, is expected to suffer a NT$4 billion pretax loss. Chi Mei Optoelectronics Corp. will probably suffer a loss of NT$1.5 billion against an estimated total sales of NT$25 billion. HannStar Display Corporation is expected to lose NT$3.484 billion with a total projected sales of NT$20.5 billion. Q-lity Computer Inc., a member company of the Quanta Computer Inc. — the leading notebook PC maker in Taiwan, is also expected to suffer a pretax loss of NT$1 billion, according to local press report. The discouraging forecast from industry insiders was due to the plummeting prices of TFT-LCD in the first quarter. The TFT-LCD makers are shipping their products at prices lower than their production cost. As a result, makers in Japan have decided to switch their production to smaller size flat display panels.

As such, Chen said that prices in the second quarter would stop declining. He predicted that prices of TFT-LCD may return to reasonable levels in the second half of this year, and that the outlook for the next year is still promising. The chairman said that except for Sharp almost all notebook PC makers will shift to TFT-LCD for the displays of their notebook PCs. Earlier this year about 93 percent of notebook PCs shipped were built with TFT-LCD. By the end of this year that percentage would be close to 100 percent, Chen said. This was part of the reason for the promising outlook. Another reason for optimism is the growing demand for LCD video monitors. The compound growth rate of LCD monitors from now to the year 2005 is estimated to be 40 percent. The shipment volume of LCD monitors is expected to reach 14 million units by the end of this year, 21 million by end of 2002, 26.5 million by end of 2003, 33 million units by 2004, and 46.3 million by end of 2005. These figures translate into the fact that LCD monitors will be quite affordable by the year 2004. Those consumers who prefer to use fancier products could expect to differentiate themselves with such products as plasma display panels and OLED (organic light-emitting diode) display panels. Those would be the products Taiwan flat display panels would introduce in the near future, which is a third reason for the optimistic outlook.

TFT-LCD will have to move a certain part of their production to mainland China, which is the only way to further lower their production costs because mainland China is also closer to customers such as Acer, Quanta, Inventec, and Asustek, which have all built their notebook PC plants in mainland China.