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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Curbstone who wrote (788)	3/20/1999 6:52:00 AM
From: Martin Rasch	Read Replies (1) \| Respond to of 54805

Hi Mike, here we are (deleted the table which is worthless without a fixed font): GIVING THE PEOPLE WHAT THEY WANT When analyzing supply and demand in the TFT-LCD industry, Stanford Resources believes that it is not useful, but rather misleading, to use so-called "size equivalent" units. TFT-LCD manufacturers produce different sizes on each production line based on demand. These production decisions are affected by the substrate size of the production line. For example, since a 550mm x 650mm line can produce 6-up 12.1-inch panels or 4-up 13.3-inch panels; using either 12.1-inch or 13.3-inch equivalents as the unit of measure does not reflect the large difference in productivity inherent in a small difference in panel size. Instead of using a single equivalent size metric, Stanford Resources has developed a detailed model of worldwide TFT-LCD production, accounting for all known production lines. Based on primary research with manufacturers and knowledge of the substrate sizes used on each line, we can estimate the number of panels of each side produced worldwide. These totals can then be compared to the detailed demand database compiled by Stanford Resources, producing a panel size supply/demand comparison. Our most recent supply-demand analysis exercise indicates that, while there was some overcapacity in 1997, the highest demand was for 12.1-inch panels, and was not met. In 1998 the oversupply situation has been across the board in terms of panel sizes. The most dramatic oversupply is in the popular 12.x–inch sizes, as many manufacturers ramped up production in response to the increased demand of 1997. The year 1999 currently looks like a mix of oversupply and undersupply. As notebook manufacturers move to larger size screens, and as the production of desktop monitors increases in 1999, the 13.x- and 14.x-inch panel sizes are forecast to move into a supply-constrained situation. At the same time, there will likely be residual oversupply of 12.x-inch panels. As demand is forecast to remain relatively low for 15.x-inch and larger panels, the supply situation looks to be relatively balanced. All indications point to near-term supply-constrained conditions, but what about the year 2000? Some observers have stated that that there will be extreme supply limitations, to the extent that lack of LCDs will limit end-product market growth. However, simply extrapolating from current conditions and suppliers does not incorporate all of the possibilities. For example, there are numerous manufacturers outside of Japan and Korea* that could very well be producing significant volumes of TFT-LCDs by the year 2000. While there are a large number of uncertainties, two factors are important to consider. First, due to differences in economic structure and industrial organization, Taiwan is not suffering the effects of the Asian financial crisis nearly as much as Japan and Korea. As a center of PC and notebook production, domestic companies see Taiwan as an ideal location for TFT-LCD production, and many have the financial resources to build a production line. Second, Japanese TFT-LCD manufacturers apparently see technology transfer as an attractive business arrangement. The chart below lists companies in Taiwan and the People's Republic of China that are investing in TFT-LCD production, along with the Japanese company providing the manufacturing technology, as well as the planned start of production and substrate size. While Prime View and Unipac have been producing small TFT-LCDs for several years, all of the others are new entrants. The Jilin project is particularly notable, as there has been no TFT-LCD production to date in mainland China. Among other Taiwanese companies, Nan Ya Plastics and Picvue Electronics currently produce STN-LCD panels, but are reportedly considering entering into TFT-LCD production. Taiwanese companies that are possible new entrants include Hann Star Displays and Teco Optoelectronics. Another possible TFT-LCD manufacturing location is Malaysia, where a subsidiary of U.S.-based contract manufacturer Solectron is considering developing a TFT-LCD production line, possibly with the assistance of Toshiba. Finally, Daewoo Electronics, the only large Korean electronics company that had not previously entered into TFT-LCD production, recently announced its intention to build a fab line in 1999. The large number of manufacturing starts between now and the end of 1999 should give pause to any strong assertions of supply limitations in the year 2000. Although the industry crisis of 1998 indicated to many that several producers would drop out of the market, there is an equal chance that the number of producers will actually increase over the next year. While it is possible to make assessments of the overall level of supply and demand in the LCD market, our analysis indicates that there are significant differences among display types and sizes, and that for any given application, substitute products are available in the case of supply constraint. Thus, making statements regarding the overall level of supply-demand balance, or using a single size equivalent is not satisfactory for a thorough market analysis. A key element of success in display manufacturing is producing the display type and size that the market demands at each point in time. Understanding the capability of all manufacturers (including the possibility of new entrants) to produce the key sizes is the most reliable way to assess the supply-demand balance at the product level. *who are they ? Martin