Tablet growth alters LCD strategies

In response to falling large-area TFT LCD panel prices in 2011, panel makers have minimised their production, but preparation for 2012 models and gradual clearing of supply chain inventories are encouraging them to take a more positive stance in their production strategies.

According to the NPD DisplaySearch Quarterly Large-Area Production Strategy Report, global TFT LCD glass input peaked in Q2’11, achieving a record 42.1 million square metres, but then fell to 36.5 million in Q3’11, and was expected to reach 37.8 million square metres in Q4’11.

In Q1’12, panel makers expected to increase glass input by 5%, to 39.8 million square metres. The forecast capacity use was 77% in Q1’12, which was 7% higher than previously expected. This is partly based on expectations that prices had bottomed out in this cycle.

Also, makers were planning for new models, such as larger size multifunction monitor panels, ultraslim notebook PC panels, new TV panel sizes including with CCFL and LED backlights and slim bezels.

According to Shawn Lee, senior analyst for NPD, “Increasing production does not necessarily increase shipments, as panel prices are close to cash costs in many cases. However, improved inventory and price outlooks, as well as the launch of new panel models, are leading panel makers to be more optimistic,” Lee added.

“Other factors leading to the increased production forecast include the need to increase use rates to cover depreciation costs and the fact that new panel producers in China are starting to ramp up their fabs, contributing to the increased input.

In mobile PC applications, panel makers plan to decrease production of mini-note PC panels while increasing production of tablet PC panels, with area production of tablet PC panels expected to double from Q1’11 to Q2’11.

Makers are also reshaping their tablet PC panel production strategies, with Sharp using its Gen 8 fab to produce tablet PC panels with oxide TFT backplanes, and Samsung, LG Display and Sharp producing tablet PC panels with more than 200 pixels per inch.

Other panel makers, including AUO, Chimei Innolux, BOE, CPT and HannStar, are planning to apply more production resources to tablet PC panels in 2012. Although Gen 5 and smaller fabs will mainly produce mini-note and tablet PC panels, more than half of these will be produced in Gen 6 and Gen 8 starting in Q1’12.