Wed, Dec 25, 2002 - Page 10 News List

LCD demand may soon rebound

TECH WATCH While efforts to pursuade consumers to replace old monitors with flat-panel displays seem to be bearing fruit, analysts say South Korea is catching up

By Bill Heaney  /  STAFF REPORTER

LCD makers are keeping 15-inch factory lines humming through the traditional year-end slow-down, a sign that an industry push to get consumers to replace their old cathode ray tube (CRT) screens with new thin monitors is working.

Manufacturers normally experience a surge of orders in October and November in preparation for the holiday buying season in the US and Europe. This year orders have continued coming in well into December, the head of the Taiwan branch of a flat-panel display market research firm said yesterday.

"It's time for the market to replace its CRTs," Wang Chien-erh (王建二), president of DisplaySearch Taiwan said.

"The level of supply is right and the selling price is right," he said.

Fifteen-inch flat-panel displays have dropped to between US$249 and US$299 this holiday season. Consumers are snapping them up below US$300, Wang said.

Chunghwa Picture Tubes Ltd (中華映管) has been a major beneficiary of the switch to TFT-LCD. "The replacement market is very strong right now," Liu Chih-chun (劉治軍), CPT's vice-president, said yesterday.

Liu confirmed that orders for 15-inch panels were to top 600,000 in January, much higher than the company's manufacturing capacity of 470,000 units per month. The demand has spurred the firm to increase the wholesale price for each panel from around US$163 to US$180.

Chi Mei Optoelectronics Corp (奇美光電) increased its orders from South Korea's Samsung Electronics Co, local Chinese-language media reported yesterday. The report said that Samsung will double its orders with Taiwan's No. 2 supplier of LCD panels. Chi Mei's spokesperson, Jack Lin (林榮俊), declined to comment on the report.

The gains in Chunghwa's bottom line may last no more than a couple of months, however.

"The January price is a unique case and is not sustainable," said Frank Su (蘇穀祥), an analyst at BNP Paribas Taiwan. "It can only last one or two months."

South Korean rivals, Samsung and LG.Philips LCD, are expected to rain on Taiwan's parade. Having completed more efficient fifth-generation production plants to produce 17-inch panels, the South Koreans are overcoming technical difficulties in the production process and will flood the market with new products by the second quarter of next year.

"The price of 17-inch panels is falling and this will eventually squeeze 15-inch panel prices, or increase 17-inch demand at the expense of 15-inch panels," Su said.

A local industry watcher agrees with the assessment.

"Basically there are only three players in the LCD market -- South Korea, Taiwan and Japan," said Debbie Wu (吳岱玲), an analyst at Yuanta Core Pacific Securities Co (元大京華證券).

Taiwan became the world's second-largest supplier this year as Japanese manufacturers began to phase out some of its LCD production, choosing to focus more on larger screens as well as small color screens for mobile phones.

Wang said that Taiwan now supplies 35 percent of the world's TFT-LCD panels compared to about 37 percent for South Korea. Japan's takes around 20 percent of global market share.

Taiwan may end up losing the race with the South Koreans by the middle of next year.

"The gap between Taiwan and [South] Korea will grow larger next year because the Taiwanese lag behind the [South] Koreans by two quarters," Wu said.

Taiwan's LCD manufacturers will not have 5G manufacturing plants ready for mass production before the middle of next year.

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