The trade spat between Japan and South Korea is providing a short-term boon for local display makers, but Taiwan must brace for the impact of a Seoul subsidy for its display makers as it reduces reliance on Japanese materials and components, the Taiwan Display Union Association (TDUA) said yesterday.
The union’s comments came after Tokyo last month tightened export restrictions on three key materials — fluorinated polyimide, resist and hydrogen fluoride — used in manufacturing semiconductors and display screens for smartphones and TVs.
Fluorinated polyimide is a key chemical in the manufacturing of OLED panels.
“Taiwan might benefit from the trade dispute between Japan and South Korea in the short-term. The transferred orders might be limited as Taiwanese companies do not produce some of the affected products [OLED panels],” TDUA deputy president Michael Wang (王信陽) told reporters on the sidelines of an annual trade show for display manufacturers in Taipei.
Local display makers are not interested in developing costly OLED technology, as it requires a substantial, long-term investment, which is not feasible for them as they are mostly smaller in scale.
AU Optronics Corp (友達光電) and Innolux Corp (群創) have said that they are pinning their hopes of a comeback on new and relatively affordable technologies: mini and micro LED displays.
Wang said that South Korean panel makers are bypassing Tokyo’s ban by gaining access to fluorinated polyimide through their facilities in Taiwan, which has allowed them to avoid production disruptions amid shortages of the material.
Determined to fight Japan, the South Korean government is encouraging domestic production of key materials, equipment and components, Wang said, adding that local sourcing would lower costs for South Korean companies, while increasing their competitiveness.
Their increased competitiveness would have “negative effects on Taiwan over the next 10 years,” he said.
Without government support, Taiwan’s display industry is at a disadvantage, given the slow pace at which technology is being developed and a supply chain built, he said.
Wang repeated his call for the government to allocate 8 percent of its annual technology fund to help local display companies overcome challenges and speed up technological upgrades.
“Taiwanese panel makers are adjusting their business models. The companies aim to play a bigger role than just panel supplier,” Wang said.
Domestic display manufacturers, sandwiched between Chinese and South Korean competitors, are expanding into four new areas: smart retailing, smart transportation, smart healthcare and new applications, he said.
By 2030, local display makers expect annual production to reach NT$2 trillion (US$63.79 billion), from NT$1.5 trillion last year, TDUA said.
The annual display trade show is expected to generate as much as NT$300 billion in orders for local display makers, it added.
The trade show is to take place on Aug. 28 to 30 at Nankang Exhibition Center in Taipei.
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