A decade ago, innovative Tai-wanese flat panel display companies started investing in a cutting-edge and cost-saving organic light-emitting diode (OLED) technology in an attempt to move beyond the slim profits associated with original equipment manufacturing.
Those companies, however, have all but given up hope as high technological barriers and cutthroat competition from cost-efficient liquid-crystal-display (LCD) makers have placed them deep in the red.
"Taiwanese companies hoped to make big money from manufacturing slimmer OLED displays at lower prices than LCD panels," said Roger Yu (
"But, the dream has not yet come true as progress in developing competitive products has been slow because of poor foundry yields and performance," Yu said, adding that most companies were still struggling to break even.
Low yields have prompted LCD panel makers AU Optronics Corp (
Heavy losses have driven many pure OLED manufacturers out of the market. Singapore's Ness Display closed its doors recently because it failed to attract enough capital amid falling prices to continue operations.
Back home, optical-disk maker Ritek Corp (
"Sharp price reductions and difficulties in cutting costs are the major challenges for OLED display makers," said Kevin Liao (
Ritek said on Wednesday that it planned to sell an OLED manufacturing affiliate, Ritdisplay Corp (
"The deal will bring more resources for Ritdisplay and boost its core competitiveness as well as reduce financial reliance on the parent company," Ritek said in a statement.
DisplaySearch's Liao also said limited OLED equipment and component suppliers were behind slow improvements in the industry cost structure.
Technologically, OLED displays readily compete with LCDs in small-and-medium applications such as handset displays and MP3s palyers, but LCD makers are able to edge OLED suppliers out of the market by undercutting them on price.
Overall, OLED display shipments expanded by 15 percent to 16.1 million units in the second quarter of this year over last year, but revenues dropped 14 percent to US$112 million, according to a DisplaySearch tally.
"It's tough for Taiwanese companies to survive as they are smaller in scale than their rivals," Liao said.
Liao said those companies remaining in the industry were conservative about expansion plans.
Ritdisplay, established in 2000, has a capital value of NT$7.5 billion while