LCD glass suppliers ramp capacity, but is it enough?
Spencer Chin
04/10/2003 2:43 PM EST
URL: ebnews.com
LCD glass suppliers are rushing to add extra manufacturing capacity to meet rising demand for large displays, but analysts say that a shortage could still develop over the next few months and perhaps stretch through 2004.
Although the overall outlook for LCD materials calls for falling prices and abundant inventory, a recent report by DisplaySearch Inc., Austin, Texas, projects that glass demand will slightly exceed supply until the fourth quarter.
By then, Corning Inc. is expected to bring additional processing tanks on line. The display materials and components company provides more than 50% of the industry's LCD glass capacity, according to DisplaySearch.
Corning's competitors are also ramping up their manufacturing lines. Japan's Asahi Glass Co. Ltd., the second-largest glass supplier with a 25% market share, is expected to do so in the third quarter, while several smaller suppliers, including Taiwan's Picvue Electronics Ltd. and Germany's Schott Group will do the same early next year.
But the additional capacity may still not be enough, warned DisplaySearch analyst Ross Young. "If sales of TVs and monitors meet our forecast, there are potential shortages by the end of 2004," he said.
Although projections of glass shortages concern LCD suppliers as they migrate toward building 20in. and larger panels for desktop monitors and flat-panel LCD TVs, some worry more that current economic and political conditions could dampen sales.
"Never before has the LCD industry faced daunting obstacles like the Iraq war and the weak economy at the same time," said Carl Steudle, vice president of marketing for San Jose-based LG.Philips LCD America Inc., the U.S. subsidiary of Korea's LG.Philips LCD Co. Ltd. "Retail monitor sales are not compensating for a drop in corporate purchases," he said.
Moreover, LG.Philips foresees no problems with supplies of glass or of LCD drivers and filters, according to Steudle.
However, given the sharp cyclical swings of the LCD industry, neither display nor materials suppliers want to be caught off-guard if demand meets or exceeds expectations. Though uncertain on how demand will play out, they believe that investing hundreds of millions of dollars in advanced fabs will reap higher margins from larger display panels they will be able to produce at lower cost.
To satisfy demand for larger substrates, Corning has begun sampling 1,500 ¥ 1,800mm glass for Generation 6 fabs that are now under construction by Sharp Corp. and other suppliers, and is developing even larger glass for Gen 7 fabs being planned by Korea's Samsung Electronics Co. Ltd., noted Corning spokesman Jim Terry.
J.C. Lapp, a development associate for the Corning, N.Y., supplier, noted during a presentation at the recent DisplaySearch Flat Panel Display Conference in La Jolla, Calif., that a 25in. LCD TV requires three times the glass of a 15in. monitor. But later-generation fabs will be able to fabricate more panels from a single substrate, improving economies of scale to lower display production costs, Lapp said.
For example, the materials cost for making a 15in. LCD monitor panel, including glass, color filters, polarizers, driver ICs, and backlights, is expected to decline about 10% annually through 2006, according to DisplaySearch. |
