LCD-TV Makers Go Thin and Green to Generate New Growth

LCD manufacturers are looking beyond pricing and volume to gain market share. Those that take the lead will do so by developing and optimizing slimmer, more energy-efficient models.

by Sweta Dash

AFTER YEARS of blistering increases fueled by booming television sales, global large-sized LCD-panel revenue growth is decelerating and profitability is dwindling, prompting suppliers to turn to thinner and more ecologically friendly products in order to spur consumer interest. This article, based on a recent report from market-research-firm iSuppli Corp., discusses recent LCD market statistics, then outlines several related trends.

Strong Shipment Growth, Weak Revenue Expansion

Worldwide large-sized LCD-panel unit shipments are expected to rise at a compound annual growth rate (CAGR) of 13% from 2008 through 2013. (iSuppli defines large-sized LCD panels as those having a diagonal dimension of 10 in. and larger.) The growth will be mainly fueled by a strong rise in TV sales, as well as increases in notebook- and netbook-PC demand. Desktop-monitor panels that are used for televisions and for all-in-one products will also experience growth during the next few years, despite a slowdown in desktop-PC shipments.

Even with the expected increases in unit shipments, large-sized LCD-panel revenue is expected to rise at a CAGR of only 9.8% from 2008 to 2013. This contrasts with a rise of 22% for the 5-year period from 2002 to 2007. The slowing revenue growth is increasing price pressure on suppliers of large-sized LCDs, and this phenomenon is causing profits to dwindle as well.

Conditions in the large-sized-LCD market took a turn for the worse in late 2008, when the global economic recession pushed down panel prices to less than manufacturers' cash costs. This has cast a shadow over what is shaping up to be a strong 2009 for unit shipment growth. Shipments of large-sized LCD panels are set to increase to 516 million units in 2009, up 18% from 436 million in 2008. The increase is being spurred by a rise in end-demand in the second half of the year as economic conditions improve. Other factors contributing to the rise in unit shipments include inventory replenishment among brands and retailers, strong demand from the Chinese market, new model introductions, sales spurred by the shift in aspect ratios to 16:9 and similar panels, and the increasing use of light-emitting-diode (LED) backlights for notebook, monitor, and television panels.

Despite the rise in shipments and these positive factors, global large-sized LCD-panel revenue will fall by 11% this year, declining to $65 billion, down from $73 billion in 2008, as shown in Fig. 1.

Fig. 1: Worldwide large-sized TFT-LCD-panel revenues for 2008–2013 show a market rebound starting in 2010. Source: iSuppli Corp.

Television Brightens LCD Picture

We expect worldwide LCD-TV-panel shipments to increase to 131 million units in 2009, up 29% from 102 million in 2008. This growth is due to a number of factors, including the recovery of end-user demand in the second half of 2009, a pull-in of panel orders, and strong sales increases in China. The Chinese government's consumer stimulus package has boosted sales throughout most of 2009. However, the U.S. market also will play a key role in the rise of LCD-TV-panel shipments in 2009 due to very aggressive price reductions by branded manufacturers that have increased sales.

Worldwide, the 32-in. size is the dominant LCD-TV dimension in 2009. Its popularity is attributable to increased sales in emerging economies, especially in China, where consumers are seeking less expensive models. Strong growth is expected for 40-in. and larger panels during the following years due to the shift to newer fabs, such as Gen 8.5 and 10 facilities, which will help to reduce the cost of larger-sized panels.

By 2013, we expect the worldwide TV-panel market to exceed 234 million units.

Monitor Panels on the Rise

Shipments of LCD panels for desktop-PC monitors are also forecast to grow in 2009 and beyond as a result of various factors. These factors include the rising use of monitor panels for the small-sized-television market, consumers' increasing utilization of multiple monitors to further productivity, and the arrival of low-priced all-in-one products and net-tops (small-form-factor desktop units designed for basic tasks). In the fourth quarter of 2009, more than 47% of desktop monitors shipped will employ the 16:9 format. This will rise to more than 73% by 2013. The monitor-panel market is expected to reach 200 million units in 2009 – 14 million of which actually will be used for televisions, with the remaining 186 million utilized as pure monitor panels or for all-in-one products. We project that monitor-panel shipments will reach 253 million units by 2013.

Notebook Panels Perk Up

Shipments of LCD panels for notebook PCs – including 10-in and larger screens for netbooks – will reach 170 million units in 2009, up 24% from 137 million units in 2008. Shipments should reach 272 million units by 2013, driven by rising sales of low-priced notebook computers, increased demand for systems with wireless capabilities, and the shift to larger display sizes. Shipments of 10-in panels increased to 4 million units in the first quarter of 2009, up from 50,000 units during the same period in 2008. They are expected to reach 30.6 million for the entire year of 2009, reflecting growth in the netbook market.

The 16:9 format is expected to account for 62% of notebook-PC-panel unit shipments by the end of the fourth quarter of 2009. In the fourth quarter of 2008, the 15.4-in. size in 16:10 format was the dominant dimension in the notebook market, commanding a 35% share of unit shipments, with only 8% of units accounted for by the 15.6-in. size. By the second quarter of 2009, the share of the 15.6-in size increased to 12%. We expect the majority of notebook panels to shift to the 15.6-in. size in 16:9 format.

Korea Takes Top Spot — but China Rising in LCD-Panel Production

The weaker South Korean won, bolstered by strong internal sales, rising utilization rates, and low-cost structures, has helped both Samsung and LG Display in 2009 to offer more competi-tive prices than their competitors and allowed them to gain market share. Higher utilization rates for their fabs and aggressive expansion plans in the second half of 2009 will allow them to remain the world's leading panel suppliers.

As shown in Table 1, South Korea has therefore become the world's largest national producer of large-sized LCD panels in the second quarter of 2009, accounting for 50% of global unit shipments. In the second quarter, it took the number one spot from Taiwan, which lost 6 percentage points of share during the period from the second quarter of 2008 through the same period in 2009.

While South Korea is on the rise, China is emerging as the next major growth country for large-sized LCD-panel production. Samsung and LG Display, along with Japan's Sharp Corp., have announced plans to invest billions of dollars to establish Gen 7.5 and 8 fabs in China during the next few years.

China is expected to achieve strong growth in the LCD-TV market, increasing its share of global unit shipments to 20% in 2011, up from 19% in 2009 and 13% in 2008. It is going to be the dominant region for LCD-TV sales in terms of units in 2013. Future growth in LCD-TV demand will be coming from emerging economies such as India and China, spurring the rise of production in those nations. Furthermore, concern about tariffs on imported LCD TVs is promoting the migration of LCD-panel production to China.

Revenue Slowdown Spurs Strategy Shift

For years, the global large-sized LCD-panel industry has been following a simple strategy of expanding capacity and reducing prices to stimulate consumer demand and to fuel the expansion of the industry. This approach has been wildly successful, causing notebooks to migrate to larger-sized panels, triggering the replacement of CRT desktop-PC monitors with LCDs and enabling the growth of the LCD-TV market. The strategy has continued to succeed to a degree in 2009, with very low prices for LCD-TV panels at the beginning of 2009 propelling LCD-TV shipments to new heights for the year.

However, to ensure continued growth during the next several years, large-sized LCD-panel suppliers must adopt a new strategy that departs from the conventional approach of increasing capacity to spur demand. The new approach is based on three factors: technological innovation, product differentiation, and cost reduction. These efforts must focus on producing LCD panels that are thinner and thus more attractive to consumers, but that are also less harmful to the environment and consume less energy.

We believe the next wave of growth in the large-sized LCD-panel market will be driven by consumer demand for thin, green, and power-stingy displays. These attributes will change from being "nice-to-have" features to "must-haves" features in the minds of consumers.

LCD TVs Slim Down

To capitalize on the trend for thinness, the LCD-TV-panel industry currently is focusing on creating thinner form factors by using edge-lit, white LED backlights. Ultra-slim 10-mm LCD-panel modules started to appear in the first half of 2009 and are expected to enter mass production in 2009. Most panel suppliers have introduced prototypes of slim LCD TVs during the last few quarters.

Samsung has demonstrated a 40-in. TV panel that is extremely thin at only 10 mm. The panel employs a white LED backlight rather than a conventional cold-cathode fluorescent lamp (CCFL), to achieve its thin form factor. LG Display has shown a 42-in. TV panel measuring just 19.8 mm thick. Sharp demonstrated a 52-in. TV panel just 20 mm thick, and AU Optronics introduced a 42-in. panel with a 10-mm module thickness that also is 44 % lighter in weight than conventional products.

Eco-Friendly LCD TVs

In pursuit of becoming more eco-friendly, LCD makers are concentrating on backlighting technology. In the CCFL backlight realm, LCD-panel makers are striving to reduce mercury levels and lower power consumption. By using different types of phosphors, lowering mercury use by 25%, and utilizing half the number of lamps, designer can enable advanced CCFLs to achieve color gamuts much wider than those generally offered today, while also offering reduced power consumption, slimmer form factors, lighter weight, and reduced use of a material harmful to the environment.

For example, AU Optronics demonstrated a 46-in. eco-friendly TV panel that cuts power consumption by 50% compared to conventional units by optimizing the CCFL design. Some newer LCD TVs are using 50% fewer CCFLs for same-sized panels by employing highly efficient optical films that refract or recycle light to improve brightness and color gamut. For example, a 46-in. TV using these techniques can employ just 12 CCFLs, compared to 24 for a conventional set.

Samsung has shown a 52-in. green LCD-TV panel that achieves ultra-low power consumption by using optimized CCFL backlighting with low mercury content. The panel also featured a reduced number of CCFL units, at only 14 instead of the conventional 26. AU Optronics recently demonstrated a 32-in. TV panel using only four CCFLs, down from 16.

LED Backlights Highlight Eco-Friendliness

The focus on thin LCD TVs, as well as on environmentally friendly green initiatives, will lead many panel suppliers to use LED backlights. LED backlights reduce power consumption and are free of the toxin mercury. Beyond these green attributes, LEDs also offer the advantages of wide color-gamut ratios and dynamic-area control capability.

Furthermore, LED backlights can be combined with dimming or scanning technology to improve color contrast and black levels. RGB LED-based local-dimming technology can achieve a 100,000:1 dynamic contrast ratio, a color gamut more than twice the area of current offerings, a 20-mm thickness, and a 40% lower power consumption than CCFLs. However, the advantages of RGB LEDs are offset by their higher costs relative to that of white LEDs.

White-LED-based backlights also offer a slimmer form factor and lighter weight compared to RGB LEDs. On the other hand, they lag behind RGB LEDs in terms of color gamut. Many suppliers use low-power edge lights or side-mounted white LEDs to minimize differential degradation, reduce costs, and solve thermal issues.

Cost issues continue to prevent LED backlights from being adopted more widely, but the gap in pricing between LEDs and CCFLs is narrowing for television and monitor panels. Television makers are increasingly combining LED backlights with higher refresh rates of 120 or 240 Hz in their high-end sets. Many consumers are finding it hard to justify the higher costs of 240-Hz models. However, panel and television suppliers are offering 240-Hz sets with LED backlights at very aggressive prices in the hopes of making them more appealing. The reduction of the price gap between LED- and CCFL-backlights also is spurring adoption of LEDs in the monitor and notebook markets. Notebooks already are rapidly shifting to LED backlights because of their slim form factor, instant-on capability, and longer battery life.

You Can't Be Too Thin or Too Green

The large-sized LCD panel market is under-going a fundamental shift from focusing on volume and price to embracing innovation and differentiation. Panel suppliers and OEMs that succeed in using these competitive weapons to attain thinner form factors and become more eco-friendly will be the market winners in the coming years. •