Massive investment will earn Taiwan a 21 percent share of the global market for notebook LCD screens by 2001, but today's high profits will vanish as new entrants to the market begin mass production.
Uni-President Enterprises (
Several of the companies currently entering the market plan to set up three or even four production lines.
Kao Chin-yen, chairman of the US$2 billion a year group, told reporters that the smaller Kinpo Group (
For more than a year, the large LCD screens that make up more than 30 percent of the cost of the average notebook PC have been hard to find. Analysts estimate that just around 85 percent of demand is being met. As a result, LCD prices and profits have risen.
In addition, Japanese companies, which are no longer able to manufacture profitably on home soil, are increasingly willing to share LCD technology with Taiwan.
The lure of high profits, and the easy availability of technology, have led seven groups to set up notebook-sized LCD screen factories in Taiwan, with several more planning to join them. According to a recent report from Taiwan's Market Intelligence Center (MIC), six of the new LCD factories will have started mass production by the first quarter of next year.
Most of them plan to produce around 30,000 LCD panels per month initially. The MIC is a partially government-funded technology research organization.
Analysts agree that as the new manufacturers bring production lines up to speed, LCD prices will begin to slide, falling as much as 20 percent in 2001.
"No one wants to talk about it, but we believe there will be a price war after the end of next year," said an executive at one of the new LCD makers, who requested anonymity.
Taiwan has seen a similar pattern of massive investment followed by oversupply before, most notably in the DRAM market.
Manufacturers from traditional industries, such as Uni-President, are hurrying to diversify into high-tech fields, and are prepared to burn large amounts of capital in the process.
"We expect this, and we are prepared for it," the executive said.
Taiwan's earlier move into DRAM memory chip production was a particularly painful experience, exacerbated by the Asian financial crisis.
Most of the island's manufacturers entered the market at the beginning of a two-year slump from which prices are only just beginning to recover.
Deep pockets saw most through lean times, and today, Taiwan claims a 12 percent share of the global DRAM market, compared to less than 2 percent five years ago.
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