Taiwan: Product Mix Upgrades Boost Volume, Value

In the first quarter of 2005, Taiwanese small and medium size panel shipment volume and value respectively rose 11.3 and 50.8 percent year-on-year. The increase in shipment volume was driven by strong growth in CSTN, LTPS, TFT, and OLED panel shipments. Shipment value rose on growth in CSTN and a-Si TFT panel shipments.



Taiwanese small and medium size panel ASP (Average Selling Price) increased strongly, from $6.6 in the first quarter of 2004 to $8.9 in the first quarter of 2005, posting a 34.8 percent year-on-year growth rate and a 9.9 percent sequential rise from $8.1. The primary reason for shipment value increase was due to changes in the industry’s product mix. The significant year-on-year decline in the shipment value share of monochrome panels, from 34 to 23 percent in the first quarter of 2005, largely accounts for the 50 and 30 percent year-on-year growth in shipment value and ASP in the first quarter of 2005.



Applications Drive Stellar Performance in High-end Panels

In response to the burgeoning replacement effect of color panels, such as CSTN and PM-OLED, MSTN panel shipments for mobile phone and MP3 player applications are already showing declines.







First quarter MSTN panel shipment share fell slightly; although shipment volume still grew an anemic 8.8 percent year-on-year, it also translates into a 20.8 percent sequential decline. As the yield rates of Taiwanese makers continue to improve, and as CSTN panel orders from brandname mobile phone vendors’ rise, CSTN shipment share is registering steady sequential increases. In the a-Si TFT panel segment, CPT, Hannstar, and Innolux are upping the shipment volume of medium size panels, such as the 7” panel, pulling a-Si TFT panel shipment share up slightly, to exceed 10 percent, while overall shipment volume grew by 20 percent.







LTPS TFT panel orders for mobile phone, digital still and video camera applications remained at previous quarter levels, helping LTPS panel shipment volume to slide only 11.5 percent sequentially yet growing a substantial 217.7 percent year-on-year. With makers aggressively expanding their MP3 player client base and orders, OLED shipment volume increased by 87.5 percent year-on-year, but slipped 5.3 percent.







Strong Growth in Consumer Market, Panel Shipments Take Wing

Although orders from brand-name mobile phone vendors such as Nokia and Motorola declined due to the slack market season, orders from Asia Pacific mobile phone makers returned to normal levels, helping mobile phone panels to seize a 59.6 percent shipment share and to record 57.3 percent year-on-year volume growth. With increasing orders from branded makers and O D M / O E M businesses, digital still and video camera panel shipment volume reached nearly 10 million units in the first quarter of 2005, posting outstanding year-on-year growth of 86.3 percent. The iPod-driven wave of digital personal music devices has enabled small and medium size panel makers to perform strongly.



Looking ahead, with the close of the slack season, the shipment volume of consumer electronics should steadily increase. Shipments for various mobile phone, DSC, DVC, MP3 player, PMP, and portable DVD player models should revive starting in the second quarter. With Nokia also slated to procure Taiwanese TFT mobile phone panels, demand for Taiwanese small and medium size panels should increase.



Looking from the supply side, MSTN shipments are being compressed by the continual price fall of color panels, such as CSTN and PM-OLED panels. Steadily rising mass production yield rates on Taiwanese STN makers’ CSTN lines, along with falling panel prices, should accelerate the trend towards color panels. Taiwanese STN makers will see strong shipment performance in the future. Furthermore, the additional mobile phone panel orders from brand-name mobile phone vendors and DSC panel orders from domestic DSC contract manufacturers will be beneficial to Taiwanese TFT makers, who have also secured more module house clients for their cell business. It is hence expected that the shipment volume of TFT panels will continue to increase in the third quarter.



OLED panel growth was curtailed by alterations in the mobile phone industrial design fad, which downsized the scale

of the global mobile phone sub-display market. Nonetheless, rising panel demand from MP3 player makers in Korea and Southern China will drive Taiwanese PM-OLED panel shipments, enabling Taiwanese PM-OLED makers to maintain the large-scale sequential growth trends seen in 2004.



Competitors, Falling Prices to Test Competitiveness

In the second and third quarter of 2005, overall shipments from Taiwanese small and medium size panel makers should respectively average around 155 million units and 161 million units, for respective year-on-year growth of 13.4 and 20.9 percent. With intense competition going on in the large-size TFT LCD panel segment, both Taiwanese and Korean TFT panel makers are aggressively expanding their small and medium size panel production, in turn driving considerable panel price declines over the second half of 2004 in every technology type.