China plans to purchase about 30 million flat panel displays worth US$4.5 billion from Taiwanese manufacturers this year, up from 26 million units worth US$4 billion last year, a Chinese industry leader said yesterday.
“China’s flat panel display capacity is not adequate to meet domestic and foreign demand,” China Video Industry Association vice president and secretary-general Bai Weimin (白為民) said. “That’s why we came here.”
Bai made the statement after a ceremony in which eight Chinese companies signed letters of intent to purchase flat panels from Taiwan’s two leading flat panel makers — AU Optronics Corp (AUO, 友達光電) and Chimei Innolux Corp (奇美電子).
Chinese panel makers, who mostly manufacture 32-inch TV panels, have to source larger and more advanced panels, especially high-definition TV panels, from their Taiwanese counterparts, Bai said.
Chimei president Wang Jyh-chau (王志超) said at the signing ceremony that the Chinese group plans to buy flat panels of between 18.5 inches and 60 inches from Chimei, with demand hottest for 39-inch and 50-inch panels.
According to market advisory firm DisplaySearch, Chimei and AUO accounted for 47 percent of Chinese TV brands’ panel purchases by volume in the first quarter of this year, with South Korean makers taking 32 percent and Chinese local suppliers taking 17 percent.
China will need a total of 100 million TV panels this year, but Chinese panel makers only have a capacity of about 25 million units, leaving a deficiency of about 75 million units to fill for this year, Bai said, adding that smart TVs are increasingly becoming an important factor for flat panel display industries across the Taiwan Strait.
Bai said the penetration rate of smart TVs in China reached 19 percent in the first quarter, while sales of smart TVs would reach 10 million units in China this year to achieve a penetration rate of 25 percent.
“Taiwan has more advanced technology, while China offers manufacturing and a vast market,” Bai said. “If the two sides can cooperate more closely, their overall competitiveness in this sector will be enhanced.”
Taiwan and China have worked together on some technical standards to facilitate cross-strait trade in flat panel displays, Bai said, but it is especially important for the two sides to step up cooperation on next-generation Organic Light-Emitting Diode (OLED) display technologies.
Bai said several factors have benefited China’s flat panel display market, including the Chinese government’s home appliance subsidy program, the London 2012 Summer Olympics and the popularization of smart TVs and 3D TVs.
The subsidy program, which is in its last year, is particularly helpful because more than 20 million TVs will be covered by the program, she said.
The association has led Chinese companies to Taiwan to source flat panel displays and other electronic products for four consecutive years.
Because the commitment is considered to be more of a projection than a firm purchase order, the actual amount purchased by the Chinese group could fall below the targeted figures, as has been the case over the past three years.
In 2009, 2010 and last year, the group projected flat panel purchases of US$4.3 billion, US$5.3 billion and US$5.5 billion respectively, but eventually only bought US$3.4 billion, US$4.3 billion and US$4 billion in flat panels during those years.