Tue, Dec 16, 2014 - Page 14 News List

Smartwatches might not boost LCD panel makers

FORECAST:TrendForce Corp said chipmakers are likely to benefit more from the demand for wearables, while panel makers would still rely on tablet and TV demands

By Lisa Wang  /  Staff reporter

Wearable devices might not be a boon for LCD panel makers, as the much talked about smartwatches might only account for 6 percent of global small-sized capacities in 2019, Taipei-based research house TrendForce Corp (集邦科技) said.

Companies from Apple Inc and Asustek Computer Inc (華碩電腦) to fashion label Louis Vuitton are seeking new business opportunities in smartwatches as growth in smartphone shipments are expected to decelerate over the next few years, TrendForce said at an industry forum on Wednesday last week.

In September, Asustek unveiled the ZenWatch — its first smartwatch using the Android Wear operating platform — during the IFA electronics trade show in Berlin, while Apple is scheduled to launch Apple Watch early next year and HTC Corp (宏達電) might launch a smartwatch early next year, according to industry watchers.

Global shipments of smartphones are expected to grow 12.4 percent annually to 1.31 billion units next year and to 1.75 billion units in 2019, following a year-on-year growth of 25.9 percent to 1.17 billion units this year, according to TrendForce’s forecast.

“While wearable devices might help digest capacities, flat-panel makers will not benefit as much as other component suppliers such as chipmakers from the growing demand for wearables,” TrendForce analyst Boyce Fan (范博毓) said.

Fan said one-quarter of smartphones shipped in 2019 would be shipped along with smartwatches, meaning that smartwatch shipments would reach about 437 million units.

Even so, smartwatches would only account for a 6 percent share of global small-sized capacities in 2019, he said.

As the expected return on investment in technology research and development of displays for wearables might be low, “only some firms are interested in supplying wearable screens,” Fan said.

As a result, Fan believes pushing for the use of larger screens for existing applications such as tablets and televisions would still be the main driving forces for the flat-panel industry.

Citing AU Optronics Corp (AUO, 友達光電), Fan said the nation’s No. 2 LCD panel maker is among the active companies, as it is collaborating with some Chinese brands in developing high-definition active-matrix organic LED (AMOLED) displays for wearable devices.

Commenting on prices for small and medium-sized panels, Fan said the downward spiral would continue and prices could plunge as much as 20 percent this quarter from last quarter, due to oversupply and weakening smartphone demand in China.

Overall, the LCD industry could face a downturn in the second quarter of next year because of excessive inventories, Eric Chiou (邱宇彬), a senior LCD industry analyst with TrendForce, said on the sideline of the forum last week.

“We are seeing inventories rise as demand [for televisions primarily] in China looks unsustainable after several holiday promotions in October and last month,” Chiou said.

“Also, mounting pressure for panel makers to cut prices might rise to a peak in May or June,” he said

Chinese panel makers are scheduled to ramp up new production lines in the second quarter next year and that would add pressure to panel prices, Chiou said.

The industry is likely to recover in August or September when a new round of inventory buildup demand arrives, he said.

Next year would be a “healthy” one for the world’s LCD industry, as panel supply is expected to be only 5 percent higher than the market demand, Chiou said.

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