Slowing Growth in Notebook Output Raises Concern over Fall in LCD Production
January 29, 2001 (TOKYO) -- The growth in production of notebook PCs is slowing, which is raising some concerns for major components.
The fourth quarter of every year is the period when PC manufacturers' operation rate tends to rise, in preparation for the year-end sales campaign.
However, in the fourth quarter of 2000, notebook PC production posted only about 2 percent quarter-to-quarter growth on a primary estimate basis, from 6.32 million units in the third quarter to 6.43 million units in the fourth quarter. This is because output of notebook PCs entered an adjustment phase in the fourth quarter, after experiencing over-production in the third quarter.
In the first quarter of 2001, notebook PC production is expected to shrink by about 10 percent from the previous quarter, totaling 5.8 million-5.9 million units. The first quarter is the period when PC production tends to level off or decline because of seasonal factors. Yet, the prospects for the 2001 first quarter, which marks the beginning of the 21st Century, is much more severe than was previously expected.
Although the economic environment is likely to improve, supported by the interest rate hike in North America and the appreciation of the Euro in Europe, a recovery in the PC market may not come until the second half of this year, depending on the timing of the release of new microprocessors. If so, it is likely that the 2001 notebook PC production will register between 27 million and 28 million units.
It may be correct to say that, to push up the operation rate of thin-film transistor (TFT) production lines, a boosting of demand resulting from cutting the production costs of LCD monitors has become very important.
Last year, many LCD panel manufacturers in Taiwan offered low supply prices, or 10 percent-15 percent lower than those in other areas. Now that the supply-demand situation has eased, some observers are extremely critical of their business strategy.
"Taiwan-based businesses are heavily dependent on government support, and their strategy may not be sustainable in view of the economic trends in Taiwan," one observer said.
The evaluations of Taiwan's manufacturers have changed completely, and their Korean counterparts are likely to become the next price leader.
Meanwhile, Japanese LCD panel manufacturers are facing the need to expand their business by departing from the production of commodities (general-purpose panels) and promoting a division of labor. To survive the severe competition, they must switch to the products that require higher levels of production technology than those of other manufacturers.
As for the strategy to differentiate themselves from their competitors, the panel manufacturers that have acquired the power to develop new products that meet the needs of users, such as the early introduction of reflective low-temperature polycrystalline silicon TFT-LCD (Si-TFT-LCDs) and panels for audio-visual (AV) equipment with high-speed response times, will probably hold a dominant position in the market.
(Shusuke Hayashi, Techno Systems Research Co., Ltd., special to Nikkei Microdevices)
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