South Korean flat-panel makers will probably widen their lead over their Taiwanese rivals because Seoul is helping to ease the burden of investing the billions necessary to compete in the industry, analysts said yesterday.
Without more private funding or government support, Taiwan's flat-panel industry may not be able to survive, they said.
"NT$100 billion is required to build a new production line," Wang Chien-erh (
While some TFT-LCD panel makers are raising funds for new production lines on the capital market, others are asking for government support.
But the cash-strapped government is in no position to help out.
"The only way the government can help is by lending money, but unfortunately the government doesn't have any money," said Debbie Wu (吳岱玲), a TFT-LCD industry analyst at Yuanta Core Pacific Securities Co (元大京華證券) in Taipei.
Samsung Electronics Co and LG.Philips LCD, the world's largest suppliers of TFT-LCD panels, are located in South Korea, where the government has no qualms about funding investment, she said.
Government loans enabled the South Korean flat-panel industry to mass produce more efficient fifth-generation panels in the final quarter of last year. Fifth-generation, or 5G, technology allows manufacturers to cut larger 17-inch panels which now sell for up to US$100 more than the industry standard 15-inch.
Taiwan's leading players, AU Optronics Corp (友達光電) and Quanta Display Inc (廣輝電子), are expected to begin producing 5G 17-inch panels in the second quarter of this year, a full six months behind the Koreans. Chi Mei Optoelectronics Corp (奇美光電) should catch up in the fourth quarter, with HannStar Display Corp (瀚宇彩晶) trailing in last place at the beginning of next year.
Plagued by financial difficulties, Chunghwa Picture Tubes Ltd (中華映管) isn't even in the 5G race, and plans to launch a new 4G plant by the second quarter.
The government does offer indirect financial support to the TFT-LCD industry, funding improvements in infrastructure such as roads and a stable water supply, Wu said. In addition, there are also some tax breaks and cheap land deals for factories, but when it comes to funding more efficient plants, TFT-LCD companies are "on their own," Wu said.
Taiwan's rise in the global TFT-LCD industry is nothing short of meteoric. In 1999, the nation accounted for around 2 percent of shipments worldwide. Now Taiwan has 37 percent of the market, placing it second only to the Koreans.
"The rapid development of the LCD market in Taiwan was due to the ready availability of investment cash at the time," DisplaySearch's director, David Hsieh (
In the first half of last year, Taiwan took the pole position, but fell behind in the second half when Samsung and LG started to produce 5G panels. The Koreans are already planning 6G and 7G plants, Hsieh said.
While it took the Koreans five years to 1999 to achieve a market share of 36 percent, the Taiwanese achieved a 39 percent market share in just three years. But a lack of ready cash from investors and banks has delayed the development of 5G factories locally, and this has placed them at a disadvantage.
"South Korean makers are adopting pricing and continuous investment strategies to weaken competition from Taiwan makers," Wang said.
One of Taiwan's winners is Chi Mei. In a statement yesterday the company announced sales of NT$40.8 billion last year, up 147.5 percent on 2001. That represents almost 5 million panels shipped over the 12-month period, 121 percent more than in 2001.
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