Supply shortage could worsen: iSupply

Makers of liquid-crystal display (LCD) panels may start to feel the pinch of supply constraints on key materials used in the manufacture of larger LCD screens in the second half of the year, market researcher iSupply Corp said in its latest report.

"These material suppliers presently are limiting production increases as a reaction to conditions in 2004," iSupply said in the report, which was released on Thursday.

Materials suppliers suffered a supply glut last year as demand dwindled when the thin-film-transistor (TFT)-LCD industry entered a downturn in the third quarter of the year, the researchers said.

The most acute shortages will be in the supply of glass substrates and new-generation color filters, although other parts will not be immune, iSupply said.

The firm predicted that the supply constraint on glass substrates for TFT-LCD panels bigger than 10 inches (25.4cm) would worsen further in the fourth quarter of this year.

To secure sufficient supply, AU Optronics Corp (友達光電), the world's third largest maker of TFT-LCD panels, signed a deal with the world's biggest glass-substrate maker, Corning Inc, last month to supply next-generation glass substrates in the next four years.

Color filters used in fifth- and sixth-generation LCD fabs are expected to experience shortages of 7 to 12 percent in the final quarter of this year, iSupply said.