Harry, know any companies that can benefit from this screaming back order mess. I've highlighted two areas within article. I'm looking also.
"Driver IC shortage pinches cell
phone, LCD makers
By Anthony Cataldo
EE Times
(03/10/00, 5:01 p.m. EST)
TOKYO ? A severe shortage of driver ICs for flat-panel displays has
caused a bottleneck in production of the thin-film transistor (TFT)
LCDs used in notebook and desktop monitors, and is putting the
squeeze on smaller passive screens that go into cellular phones. While
many of the large driver IC makers in Japan are scrambling to boost
supply, some are reluctant to invest in older technologies required to
produce these key components.
LCD drivers are one of several hard-to-get components that threaten
to stifle cellular phone shipments. If supply were to keep pace with
demand, shipments could rise from last year's 260 million to 400 million
this year, said Masatomo Miura, wireless business manager for Texas
Instruments Japan, a large supplier of TFT LCD drivers here. However,
the shortages could hold total shipments down to 300 million this
year, he said.
Responding to the shortage, leading driver supplier NEC Corp. said
Thursday (March 9) that it has struck a deal with Sanyo Electric Co.
Ltd. to outsource an additional 4 million units per month production of
driver chips for large TFT panels.
The devices, situated on the periphery of the LCD panel, are
necessary for applying voltages to the screens. With demand
outstripping supply by some 20 percent, NEC has had to put
customers on allocation with three-month lead times, a company
spokesman said.
One of the largest LCD panel makers, NEC expects the total market
for TFT-LCD drivers will have to double to 700 million per year by 2002
to keep up with panel production. But because of the driver IC
shortage, the growth rate could stall.
"Our TFT people have said that one big obstacle to growth will be the
availability of key components like drivers," said an NEC spokesman.
Widespread shortage
Leading LCD manufacturer Sharp Corp. said the IC driver shortage is
affecting nearly every major segment of the market, including
notebook PCs, LCD monitors and game machines like Nintendo's Game
Boy. But it was demand for cell phone screens that took the company
by surprise. "Nobody in the company thought that the market for
cellular phones would grow by this much," said a spokeswoman.
To respond to cell phone makers' needs, suppliers of driver ICs are
shifting part of their production from TFT drivers to the
supertwisted-nematic (STN) drivers used in cell phones. But the
number of driver suppliers is so small that this shift is robbing TFT
makers of their supply, observers said.
Meanwhile, cellular phone makers are hardly getting what they need.
TI's Miura called the parts shortage "a very serious problem" for cell
phones.
"LCD drivers require a high voltage to drive the panel, and [driver IC]
suppliers cannot shrink the die even if they have a deep-submicron
process technology," he said. "The product needs to be built at an
older factory, but nobody wants to invest in older factories. Also,
driver ICs need a high-voltage buffer, so the wafer cost is very high."
Besides the supply crunch in drivers, Miura said, cell phone makers are
having trouble obtaining "parts like flash memory, SRAM and crystals."
One problem for phone makers is that the largest Japanese driver
manufacturers are heavily invested in TFT LCDs, which are larger and
require more of the ICs on the periphery. TI Japan, for example, is one
of the biggest supplier of driver ICs in the world, but it only makes
them for large TFTs used in notebook and desktop computers. A
spokeswoman said the company is now considering entering the
market for small panels. NEC, for its part, said the vast majority of its
drivers are for the larger TFT displays.
In Taiwan, companies that make LCD modules have seen a shortage
of IC drivers for the last two months. Notebook makers expect to feel
the pinch shortly as the LCD module supply dries up.
"Every LCD maker has this problem getting enough drivers," said H.B.
Chen, president of Acer Display Technologies Inc. "The problem will
last until at least next year. That's because it takes about nine
months for a fab to qualify as a new source of ICs."
The shortage has notebook makers worried. "For this month and next
month, our LCD supplies are OK," said Jim Wong, vice president for
mobile products at Acer. "We've already been put on notice by our
suppliers, though, that after that there will be supply problems. As a
result, we have told our OEM customers to plan accordingly."
The shortfall could actually be a boon for Taiwanese chip makers,
some of whom produce LCD driver ICs under contract for the large
Japanese companies. For example, Mosel Vitelic Corp. is currently
producing LCD drivers for several Japanese companies and plans to
convert more production away from DRAMs and into LCD driver-chip
production.
"These ICs were seen as a low-tech IC in the past, so most fabs
didn't concentrate on them," said Thomas Chang of Mosel Vitelic.
"Now there is a shortage and the prices are quite good. We are
getting about $700 per 6-inch wafer of LCD driver chips."
Securities analysts in Taiwan think this figure a bit high but still say
that margins for LCD drivers should be quite good for the Taiwanese.
"Since these 6-inch fabs' capital expenditure has already been paid
off, the costs of these wafers is just material and variable costs," said
one analyst. "That works out to about $250 [per wafer]. They
probably are selling the wafers for about $500. That's a 50 percent
gross margin."
Drivers, they said
Back in Japan, TI, NEC and others are trying to increase their
production rapidly. Starting this fall, Sanyo will begin producing 2
million driver IC chips a month for NEC. At the same time, Sanyo will
make another 2 million a month to sell under its own brand. Between
NEC and Sanyo, production of the NEC TFT driver chips will increase
from 9 million to 13 million per month.
TI Japan aims to boost its driver IC capacity by 50 percent this year.
Last year, it decided to close its main driver plant in Hatogaya, Japan,
because the facility was too small and couldn't be expanded on
account of being located near a residential area. The company
transferred the production to two other Japanese plants and one in
the United States in an effort to increase capacity. The TI
spokeswoman would not disclose TI's driver IC production output.
Similarly, Sharp plans to increase its production of IC drivers from its
current 20 million pieces a month to 30 million by the end of March
2001.
Sanyo is already a supplier of STN drivers used in cellular phones, but
a spokesman said he was unsure whether production capacity would
be expanded for these chips. Because Sanyo has not made its own
TFT driver ICs, it accepted NEC's offer to outsource production as a
way to expand its presence in the market.
Other suppliers are not as eager to expand their capacity even with
the shortage. Toshiba Corp. makes 6 million LCD drivers a month at its
factory in Oita, Japan, but has no plans to change its production
level. That's because the factory is producing high-value-advanced
logic chips like the 128-bit Emotion Engine CPU for Sony's Playstation
2, and is already running at full capacity, a spokeswoman said.
Toshiba, however, has been placing much of its LCD emphasis these
days on polysilicon-TFT LCDs which, unlike conventional
amorphous-silicon panels, do not require discrete driver chips. With
the poly LCDs, driver circuitry is integrated into the display substrate
itself, along with the TFTs and related circuitry.
Though NEC was interested in increasing its supply of driver ICs, it
wanted to avoid investing in new production, so it started looking for
a partner when supply started getting tight last spring. "We were
looking to work with a partner for a while," said the NEC spokesman.
"One of the motivations was that we needed to meet demand quickly
and get production up and running fast."
Like Toshiba, NEC wants to focus its capital investments in areas
where it can stand out from competitors, not just respond to spurts in
demand. "The emphasis is really on high-end system chips," he said.
"We don't want to invest our money reactively, we want to invest
proactively."
? Additional reporting by Mark Carroll |
