Competition for Cellular Phone LCD Panels Heats Up
April 16, 2001 (TOKYO) -- Manufacturers of large-scale integrated circuits and liquid-crystal displays are starting to turn their back on the personal computer business because of falling profits, and focus instead on the cellular phone business.
Recently, such makers are intensifying competition for color LCD panels for cellular phone handsets with five different types of LCD panels: super twisted nematic LCDs, thin-film diode LCDs, amorphous Si TFT-LCDs, low-temperature polycrystalline Si TFT-LCDs and electroluminescent LCDs (see figure). Unlike PCs, there are many requirements for cellular phone handsets, and no single type of LCD panel can meet all requirements.
Potential Growth Remains High
The potential growth for cellular phone handsets is still high. The market is expected to maintain a growth rate of 15-20 percent in volume terms until 2005.
A survey by Daiwa Institute of Research Ltd. forecasts production for 2001 at around 500 million units, a growth of 25 percent from the previous year. According to the research institute, current uncertain factors such as growth in the United States and Chinese markets, as well as migration to data communications (from voice communications) in the European market, are likely to become positive factors in the future.
Color LCD panels represent only about 14-15 percent of the entire market in 2001. However, the market is likely to expand in Korea and other parts of the world in the second half of the year.
In addition, the profitability of LCD panels for cellular phones is much higher than that of LCD panels for PCs. Because the size of the panel for cellular phone handsets is smaller, a yield of a display panel for cellular phone handsets from the single mother glass can be higher than the yield for LCD panels for PCs. A module process (assembly and selection process) which does not have to depend on manufacturing devices also can be an advantage for LCDs for cellular phone devices over other types of panels.
"Entry barriers (for display panels for cellular phone terminals) are higher than those for PCs, allowing Japanese makers with expertise in process production to have a higher profitability," Nomura Securities Co., Ltd. said.
In such circumstances, many domestic LCD panel makers which suffer from deteriorating earnings are starting to find a means of survival in the business of LCD panels for cellular phone terminals.
Different Ways of Thinking Sought
Makers cannot survive in the cellular phone handset market unless they adopt different ways of thinking for LCD panels for cellular phone handsets than for LCD panels for PCs, because demands from both markets significantly differ. This trend stems from a growing diversification of parts for cellular phone handsets and the small and medium size of such panels.
Parts are increasingly diversifying since cellular phone devices are targeting wide user groups. Cellular phone terminals are expected to meet the demands from the low-end market focusing on capabilities of a telephone device, the mid-range market for communications capabilities for text display and other data, and the high-end market for communications capabilities for animation and other data.
Each of these markets has a different priority of parts specifications. For PCs, for example, panel makers were expected just to concentrate on high picture quality and high-speed responses. For cellular phone handsets, they should develop thin, light-weight and narrow-framed products with lower power consumption for the low-end market, and products with high picture quality and high-speed responses for the high-end market.
Furthermore, parts specifications requirements are changing along with the evolution of cellular phone products. Especially for the high-end market, it is highly possible that cellular phone terminals will have a larger display panel, capabilities for wireless communications and the Internet in the future. In that case, makers will need to use similar parts as those used in PCs.
Smaller Gap in Picture Quality, Production Cost
A small- and mid-size panel will narrow a gap in the picture quality and manufacturing cost among the five different types of LCD panels. Such a gap has been seen in large-size LCD panels.
For example, many LCD panels for PCs are 12.1-inch (diagonal of 31cm) or larger, and have resolution of 1,024 x 768 pixels (XGA) or higher-definition, so that there is a clear distinction between active-driven panels such as a-Si TFT-LCD panels and passive-driven panels such as STN-LCD panels. In fact, for PCs, a-Si TFT-LCD panels with the high picture quality have been a mainstream.
Meanwhile, a current mainstream LCD panel for cellular phone devices is 2-inch (diagonal of 5cm) and has a resolution of about 120 x 160 pixels.
For larger panels, passive-driven panels with fewer lines tend to have a lower picture quality. However, since smaller panels usually have the better picture quality anyway, there is no definitive difference between active-driven panels and passive-driven ones for current cellular phone handsets.
A gap in manufacturing cost among different types of LCD panels is narrower for cellular phone handsets because the smaller the size of a panel is, the more panels can be produced from a single mother glass, the lower the cost ratio of an assembly and selection process gets.
For LCD panels for PCs, STN-LCDs with fewer processes were more advantageous than other types of LCDs because the number of processes in a wafer process affects the manufacturing cost for the entire panel. On the other hand, for LCD panels for cellular phone devices, whether makers can secure the sufficient manufacturing capacity for an assembly and selection process to meet specification requirements will be a key to success in the market.
Five Types Compete to be Defacto Standard
Based on these analyses, it can be concluded that the panel market for mobile phones will not necessarily be like the PC market. LCD panel makers regard the situation as an opportunity, and started a fierce battle to win a de facto standard status.
Makers of STN- and TFD-LCD panels hope to recoup their losses in the cellular phone market while makers of a-Si TFT-LCD panels aim to win the cellular phone device market as in the PC market. Manufacturers of low-temperature polycrystalline Si TFT-LCD panels intend to introduce device integration to panel processes to differentiate from other camps in the market, while manufacturers of organic EL-LCD panels hope to take this opportunity to establish a market with cellular phone products.
In terms of lower power consumption, which is an important feature for low-end models, STN-LCD panels will be the most suitable. Meanwhile, for the higher picture quality and higher-speed responses, features considered important for high-end models, organic EL-LCD panels will be better than any other types.
However, at present, no single type of LCD panels is able to satisfy all requirements. In such circumstances, LCD panel makers started to develop models with a larger scope of application to make up for their respective weakness.
For example, Seiko Epson Corp. aims to lead the industry by developing distinctive markets for all five types of LCD panels. Sharp Corp. tries to avoid competition between its STN-LCD panel products and TFT-LCD panel products, and aims to win the top position in the each of the both markets. Toshiba Corp. positions its low-temperature polycrystalline Si TFT-LCD panels with a built-in SRAM chip in each pixel designed to limit power consumption as its future flagship product.
Some LCD panel manufacturers, observing their position in the market objectively, recently started to enter partnership with other companies in an attempt to diversify their investment risks (see figure). For instance, NEC Corp. tied up with Casio Computer Co., Ltd. to complement module process technology, a key to success in the reflective TFT-LCD panel market. Seeing future possibilities in organic EL, Sharp, a company with competitive LCD technologies, invested in a new firm to produce low-temperature polycrystalline Si-TFT substrates, together with Tohoku Pioneer Corp. and Semiconductor Energy Laboratory Co., Ltd.
Table: Five camps for different types of panels for mobile phones
*Nikkei Microdevices assumes Hitachi is making R&D efforts for organic EL
Chart: Formation of alliances accelerates
*Created by Nikkei Microdevices
Related stories:
Color LCDs for Mobile Phones May be in Oversupply in 2001
Half of Japan's Cell Phones to Get Color LCDs in 2000: Nikkei Market Access
LCD Display Makers Compete for Orders by Slashing Quotes and Cutting Profits
(Hiroshi Asakura , Deputy Editor, Nikkei Microdevices) |
