Local display panel suppliers might face higher competition

By Ted Chen ,The China Post

Research institutes yesterday remarked that amid a rapid expansion in production capacity observed among competitors in China, Taiwanese display panel suppliers must now rely on maintaining a technical lead in preserving operating results.

China-based panel makers CSOT (華星光電) and BOE (京東方) have been rapidly expanding their production capacities, leaving Taiwan little option but to retire older fabrication plants and processes and maintain a technical lead in face of price competition from across the strait, said research institutes.

Wang Chih-kang (王志剛), chairman of the Taiwan External Trade Development Council (TAITRA, 外貿協會), had earlier advised Taiwanese suppliers to focus on producing 32-inch TV panels, based on his knowledge of a pending US$4.5 billion display procurement bid planned by industry counterparts from across the strait.

Statistics however, indicate that Taiwan’s leading suppliers, including AUO (友達) and Innolux (群創) have been observed in shifting their production focus to 39-inch TV panels, according to reports.

According to research institute IDC, 32-inch panels represent about 40 percent of global demand for TV displays, with China-based suppliers similarly adopting the 32-inch format as their primary production model. In addition, compared to China’s predominant adoption of 8.5-generation production plants, older 6-generation plants used by Taiwanese suppliers still provide a significant price advantage over competitors from across the strait. IDC analysts, however, stated that the advantage may be temporary, as newer 8.5-generation plants will yield significant cost advantage as properties, plants and equipment reach the end of their depreciation periods.

In response, Taiwanese display companies have been observed in migrating towards more competitive panel formats, and the production of products featuring new technologies such as wide viewing angles and higher 4K ultra-high-definition panels in a bid to remain competitive in the market.

According to research institute DisplaySearch, Taiwanese companies have begun to compete head-to-head with South Korean contenders including Samsung and LG in the 48- and 49-inch TV panel market niche. In particular, Taiwanese have been offering low-cost variants of 50-inch TV panels, attempting to curb the dominance of South Korean companies. Industry price listings indicate that prices for 46-inch panels average around US$300, while 50-inch panels are offered at about NT$298, a figure representing the resolve of Taiwan’s panel suppliers to initiate price competition.

As of the end of the third quarter this year, Samsung holds the leading position as the world’s largest supplier of TV panels at 23.1 percent, followed by LG Display at 22.7 percent, Innolux at 16 percent, AUO at 13.3 percent, CSOT at 9.5 percent, and Sharp at 7 percent.