Taiwanese producers of an essential component for flat-screen computer displays and televisions will face a difficult job entering the rapidly growing market for large-screen home televisions as they do not have the brand recognition of Japanese and European companies, industry watchers said yesterday.
"Taiwanese flat-panel makers face a difficult task entering the liquid-crystal display [LCD] TV market as they do not command the customer brand loyalty of the Japanese," said Wang Chien-erh (
LCD TVs are luxury items, and to persuade consumers to buy luxury products, consumers prefer a brand name they trust, Wang said.
"Compare the luxury car market," he said.
"Would you buy a car with a Yamaha label, or a Lexus? Most people would say Lexus, but Yamaha supplies the Lexus' engine. It is the same situation in Taiwan where the Taiwanese are supplying the panels for other brands," Wang said.
Taiwan is the world's second largest supplier of thin-film transistor liquid-crystal display (TFT-LCD) panels after South Korea, according to DisplaySearch.
Local players include AU Optronics Corp (
Together they supply 35 percent of the world's TFT-LCD panels, compared to South Korea's 44 percent and Japan's 22 percent, DisplaySearch said yesterday.
The five companies lack the service required to support international brand business, one analyst said.
"It is hard for Taiwanese brands to become global brands as they are very weak in after-sales service, or warranty service," said Debbie Wu (
"Local companies will only get into the LCD TV market as panel suppliers for the big names," she said.
BenQ Corp (
"If BenQ is successful at building a brand, then more local companies may follow," said Frank Su (
"The industry is changing. Look at the pattern in Japan where 30 years ago they were component makers for US brands. Gradually they changed and upgraded themselves.
"Taiwanese companies facing thin profit margins will try to enter the branding business," he said.
This year LCD TVs will account for only 9 percent of the TFT-LCD market, but will rise rapidly to overtake computer displays by 2007 in terms of market share, DisplaySearch predicted yesterday.
In 2007, one in three panels sold will be destined for a flat-screen TV, compared to 31 percent for computer displays, the firm predicts.
The traditional flat-screen markets for notebook computer and desktop computer displays are expected to do well in the second half of the year.
DisplaySearch forecast yesterday that prices for the standard 15-inch and upcoming 17-inch panels will remain stable for the rest of the year. The research firm increased its forecast for the flat-panel market from US$32 billion to US$34 billion by year's end.
If cathode-ray tube (CRT), mobile phone and personal digital assistant (PDA) screens are added, the total global display market is expected to be worth US$61 billion this year.