News

23/9/2003

DisplaySearch Report Indicates Record TFT LCD Equipment Spending Expected in 2004

DisplaySearch, the worldwide leader in FPD market research and consulting, projects record capital spending on TFT LCD capacity for 2004. According to its latest Quarterly TFT LCD Supply/Demand and Capital Spending Report, spending is expected to rise in response to strong notebook, LCD monitor and LCD TV demand. The most recent report indicates that after 25% growth in TFT LCD equipment spending this year - rising to $6.5 billion - an additional 27% growth in spending is expected in 2004 - moving up to $8.3 billion.

Driving the record spending is:

- Strong demand as seen by the latest projections of 42% large-area TFT LCD unit growth in 2003 to 97.2 million panels and 32% large-area TFT LCD revenue growth to $23.1 billion.

- A healthy pricing environment with approximately 7% ASP increases projected for Q2'03, Q3'03 and Q4'04.

- Growing profits for TFT LCD suppliers. In the case of the five dedicated TFT LCD suppliers, earnings swung from a net loss of $99 million in Q1'03 to a gain of over $240 million in Q2'03.

- Supply constraints. TFT LCD supply is expected to be tight throughout 2003, with a 3% shortage projected for Q3'03.

- Cost reductions from larger substrates. Panel costs are expected to decline more than 10% this year by migrating 17" production from 4th to 5th generation substrates with greater cost reductions expected at larger panels.

In addition, with more than 25 companies launching LCD TVs, the market outlook for the LCD TV market is extremely bright, with DisplaySearch's latest forecast projecting an 87% CAGR to 31 million units in 2007. Furthermore, the LCD monitor market is expected to continue to enjoy rapid replacement demand and the notebook market is expected to rise more than 25% in 2003. With pricing high, supply tight, and a rosy demand outlook, panel suppliers are accelerating investment plans with a number of fab schedules moving from early 2005 to late 2004. In addition, a couple of 2003 projects were delayed slightly into 2004, resulting in a very robust outlook for next year. On the other hand, with a surge in spending expected in 2004, a large decline in capital expenditures is expected in 2005.

The report also reveals the following about the TFT LCD equipment market: -- In 2003, on a regional basis, Taiwan is expected to lead total equipment spending with a 49% share as multiple manufacturers add 5th gen capacity. Taiwan is expected to take the lion's share of investment in 2004 as well.

- Although LTPS TFT LCD spending accounted for at least a 30% share of total array equipment spending in 2001 and more than 40% in 2002, moving forward, DisplaySearch believes investment in LTPS will be much lower as manufacturers focus on large area a-Si applications for monitors and televisions.

- 5th gen investment will account for over 60% of total array equipment spending in 2003, and more than 50% in 2004. 6th generation and larger substrates will dominate from 2005.

- From 2002-2004, Samsung is expected to be the largest investor in TFT LCD capacity with a 14.2% share of total spending, followed by LG.Philips LCD at 12.2%, CMO at 11.0% and AUO at 10.5%.

- PECVD is predicted to be the largest single segment of the TFT LCD equipment market, reaching over $700 million in revenues in 2004.

Detailed technical information about PECVD and all other major array process equipment segments, as well as participant profiles, market share and total available market forecasts can be found in the DisplaySearch 2003 FPD Equipment Report.

www.displaysearch.com