Flat panel display price drops stem market growth

Despite an anticipated 12 per cent increase in the number of flat panel displays (FPDs) shipped in the fourth quarter, industry revenues will decline slightly from $3.75 billion in the third period to $3.68 billion due to a sharp fall in FPD prices.

DisplaySearch, a US-based display industry research company, said industry leaders such as Samsung are feeling the impact from new Taiwan-based FPD makers such as Acer Display Technology and Chunghwa Picture Tubes, who have begun or increased mass production of the screens used in laptop computers and flat-panel monitors. "With the new Taiwan entrants, there are as many as 16 companies participating in certain market segments,'' DisplaySearch said in a release. Taiwanese makers went from 5.2 per cent of the TFT LCD market in the first quarter to 12.2 per cent in the third.

Expecting a price drop of more than 30 per cent in large panels, NEC, the world's fifth largest flat panel maker, has cut its estimate for LCD sales in the year to March by about $272 million to less than 1.5 billion. "Our outlook is that the market will hit the bottom in this fourth quarter or the first quarter of next year and then recover,'' said Sumito Seko, executive general manager at NEC.

The price declines are expected to continue for some time as more new fabs are coming online. Factory utilization will likely fall to 90 per cent in the fourth quarter and be ``significantly lower'' in the first quarter of next year, DisplaySearch said. The average selling price of large displays, measuring 15 inches diagonally, slumped 12 per cent in the third quarter to $439 per unit and is forecast to fall another 11 per cent in the next three months, followed by a 7 per cent slide in the first quarter of 2001.

Samsung remains the largest FPD maker with 19.9 per cent of the market, followed by LG-Philips LCD with 15.3 and Hitachi with 10 per cent. In a related move, NEC said it plans to outsource some production of flat-panel displays used in notebook computers in order to switch its production to more profitable, small LCD displays for use in anything from PDAs, Web appliances, and digital cameras.

NEC will use both Japanese and Taiwanese LCD makers to produce its 14 inch and 15 inch panels. To expand small screen supplies with as little investment as possible, NEC agreed with Casio Computer to cooperate in making color TFT LCDs between 1.5 inches and 8 inches. They will share development and production of two kinds of panels: ones that need backlighting and ones that don't.