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06
June
2012

Chinese suppliers shine in large-sized LCD panel market in Q1

Although the major South Korean brands continued to dominate, Chinese suppliers represented the fastest-growing contingent of the large-sized liquid crystal display (LCD) panel market in the first quarter, capitalizing on rising production and strong domestic demand for 32-inch televisions.
No. 5 Beijing Optoelectronics Technology Co. Ltd. (BOE) of China achieved first-quarter shipment growth of 18.6 percent, the best performance among the Top 10 suppliers, according to IHS iSuppli. No. 7 player Infovision Optoelectronics Co. Ltd. (IVO), also of China, increased its own shipments by a slightly smaller 18.3 percent, the second-best results for the Top 10.

However, it was two newer Chinese entrants that were not ranked among the Top 10 that saw the most explosive growth in the first quarter. CEC achieved a 63.5 percent expansion, while China Star Optoelectronics Technology more than doubled its shipments with a 103.3 percent increase, by far the largest growth in the market.

“The Chinese players are cashing in on the country’s fast-growing demand for 32-inch panels used in televisions,” said Sweta Dash, senior director for liquid crystal displays at IHS. “Meanwhile, the Chinese suppliers are ramping up production, allowing them to expand shipments at a fast pace. Both BOE and China Star have new 8.5-generation fabs, which will allow them to compete with other suppliers that possess similar next-generation fabrication facilities, especially in the television market. The Chinese manufacturers also are benefiting from new tariffs levied by their government, which are creating challenges for their overseas competitors.”

China brings new tariffs, rising competition

China’s tariffs in April increased to 5 percent for imports of LCD panels sized 32-inches and larger, up from 3 percent before. The higher tariff has the potential to erode the market share of Taiwanese suppliers, because they now have such a large market share in China.

With overall opportunities tightening in the mature large-sized LCD panel market, partly because of the rising tariffs and increased competition from China, established suppliers based outside China are in the process of figuring out their strategies to outmaneuver the competition.

Some are focusing on value-added or more differentiated products, such as high-resolution or 3-D panels, while others are moving into new TV panel sizes like 39-inch or 50-inch. While the Chinese players focus on the 32-inch panel market, the Taiwanese suppliers prefer to supply the most efficient panels that could be made in older Gen 7.5 fabs in order to avoid direct competition with their mainland rivals.

Korean suppliers maintain LCD hegemony

While the Chinese were foremost in terms of growth, the South Korean suppliers—LG Display Co. and Samsung Electronics Co. Ltd.—continued to lead overall market share in the large-sized LCD panel business. Together the two South Korean electronic titans dwarfed all other players in the first quarter, accounting for 50.9 percent—slightly more than half—of global shipments for large-sized LCD shipments.

In contrast to the commanding authority of the South Koreans, the remaining 49.1 percent of the market was held by a gaggle of 15 players—six from Japan, five from China and four from Taiwan. The Taiwanese, despite having fewer players, held larger shares individually and collectively than their Chinese and Japanese rivals.

Life’s good for LG’s large-sized LCD business

LG Display Co. continued to speed ahead of archrival Samsung Electronics Co. Ltd. as it widened its overall share in the large-sized liquid crystal display (LCD) panel market during the first quarter this year. This was due in part to LG profiting from the quarterly loss in shipments by other suppliers.

With shipments of 44.5 million large-sized LCD panels in the first quarter, LG accounted for a huge 28.1 percent of the market and was the undisputed leader in the space. LG’s performance handily beat out Samsung’s shipments during the same period of 36.2 million units, allowing Samsung to retain the runner-up position with a 22.8 percent market share.

For the first quarter, LG managed to actually expand shipments by 0.6 percent from a 27.0 percent share in the fourth quarter. In comparison, Samsung saw 7.6 percent of its shipments vanish from the fourth quarter, when it held 23.9 percent of the market.

Samsung’s struggles

The 8 percent decline in shipments at Samsung may have been caused by various factors, including a diminished customer base in China, the break-up of its LCD joint venture with Japan’s Sony Corp., and the decision by Samsung to focus more on high-end LCD segments in order to improve profitability. The decline in shipments during the period by the No. 3 player, Chimei Innolux Corp. of Taiwan, also helped LG to secure a bigger share.

Total large-sized LCD shipments worldwide amounted to 158.6 million units in the first quarter, down 3.3 percent from 169.3 million units in the fourth quarter but up 1 percent compared to the first quarter a year ago.

Big Korean domination in big LCD panels

Part of the reason for the overwhelming dominance of the South Koreans was that both LG and Samsung supplied panels internally for their own divisions that make televisions, in addition to partnerships with other TV brands. Such vertical integration was missing in many other players, which could only supply panels to outside clients and had no captive internal markets of their own.

Among other large-sized LCD suppliers, both Chunghwa Picture Tubes Ltd. and HannStar Display Corp. from Taiwan are moving away from the mature large-panel market to the small- and medium-sized LCD space, or even into panels for the touch screen industry, where greater opportunities are springing up given the increasing proliferation of tablets and smartphones. HannStar was the only company to fall out of the Top 10 in the first quarter, allowing previous 11th-place holder Tianma of China to take its spot.
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