The merger between Hewlett-Packard Co (HP) and Compaq Computer Corp is already being felt by Taiwanese producers of TFT-LCD panels, as HP squeezes the lowest possible price out of manufacturers, analysts said yesterday.
Dell Computer Corp, the second-largest computer product retailer in the world behind HP, is likely to follow suit.
PHOTO: LG-PHILIPS
"The problem is the bargaining power of HP and Dell," said Sean Wu (
The two companies buy panels in such quantities that they can shift orders between Taiwanese producers in order to find the best price, he said.
The battle for orders from HP have set a number of computer, notebook and component makers at odds with each other.
What's at stake is US$14.5 billion in outsourcing dollars HP plans to spend in Taiwan, equal to 10 percent of the nation's exports.
Last month, local Chinese-language newspapers reported that TFT-LCD panel maker HannStar Display Corp (瀚宇彩晶) had grabbed as much as 65 percent of all panel orders required by the new HP, which amounts to around 60,000 units per month. HannStar could not be reached to confirm the report.
HP officials have denied completely cutting orders from any company, saying all former partners of HP and Compaq will have an opportunity to win orders each quarter as the newly merged firm selects which firms best meet its needs.
The total amount of investment cash Taiwanese companies forecast they will need to build fifth-generation TFT-LCD plants will reach NT$170 billion over the next 18 months, Wu said.
These new plants will reduce the cost of making LCD panels by producing larger sheets of glass from which the panels are cut.
Fourth-generation plants yield six 15-inch LCD panels, the standard size for computer displays, from each sheet of glass produced.
Sheets of glass produced in a fifth-generation plant are far larger. Up to 15 standard sized computer screens can be cut from them, as well as larger 23-inch panels for LCD televisions.
South Korean based LG.Philips LCD Co and Samsung Electronics Co will have their fifth-generation plants operating by the end of this year, though the volume produced by these plants has already been taken into consideration in market forecasts and will not adversely impact TFT-LCD panel prices.
Demand for new computers bundled with flat-panel displays has soared since the fourth quarter of last year. The TFT-LCD panel market is projected to rise 69 percent to US$24 billion this year, according to US-based research company Displaysearch.
It said Taiwan became the top supplier of TFT-LCD panels for the first time in the three-month quarter ending March 31.
Shipments by Taiwanese TFT-LCD makers surpassed South Korean suppliers, rising 18 percent quarter-on-quarter and 349 percent compared to a year earlier, giving Taiwan a total of 38 percent of the market, compared to South Korea's 35 percent.
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