Taiwanese flat-panel makers AU Optronics Corp (AUO, 友達光電) and Chimei Innolux Corp (奇美電子) are lagging behind their Japanese and South Korean rivals when it comes to the thinner touch-panel technology which is often used in high-end smartphones, a Taipei-based analyst said recently.
Japan’s Sony Mobile Display began mass production of in-cell touch panels in February, IHS Displaybank senior analyst Stone Wu (吳善同) said.
Two other Japanese panel suppliers — Sharp Corp and Toshiba Mobile Display — and LG Display Co of South Korea have also been tapping into Apple Inc’s next-generation iPhone 5 panel supply chain, with the three companies scheduled to start mass production of the smartphone panels before the end of this month, he said.
Similar products made by AUO will not begin mass production until the third or fourth quarter, while Chimei Innolux will not produce any in-cell touch panels this year, Wu said.
“The yield on in-cell panels remains a key issue for most suppliers,” he told reporters in an interview.
“Even for those companies that start mass production in May, they can only reach an average yield of 65 to 70 percent at present,” Wu said, adding that the yield on touch panels used in Apple’s iPhone 4S was about 80 to 85 percent.
Compared with other technologies, touch panels that use in-cell technology can be made thinner because the touch sensors are placed inside color filters rather than on top of them.
The technology will largely be used in high-end smartphones, rather than mid-range and entry-level models, given the higher associated manufacturing cost, Wu said, adding that in-cell panels cost about 20 percent more than high-quality in-plane switching (IPS) panels which are currently used in premium smartphones and tablet computers.
In February, AU Optronics told investors it had completed research and development of in-cell panels and would start product design with customers in the second half of the year.
Wu said AU Optronics’ potential customers will likely be phone makers — possibly Taiwanese — because improving yields on in-cell touch panels measuring less than 5 inches is easier.
IHS Displaybank forecast that touch panel shipments would reach 1.24 billion units this year, up 27.6 percent from the 968 million units shipped last year.
In terms of technology, projected capacitive touch panels will remain the mainstream, accounting for 69.5 percent and 77.2 percent of total touch panel shipments this year and next year respectively, the research firm said.