German Flat Panel Display Forum

• Association
  • About us
  • Board
  • Member Companies
  • Membership
• Services
  • Meetings
  • News & Information
  • Training
  • Fairs & Conferences
  • FPD Brochure
• Events
  •  
• General
  • Contact
  • Market
  • Technologies
  • Press
  • Links
  • Legal Statement
  • Imprint
• Member Area
  •  

General

Display Market

Flat Panel Display Market Looks for New Sources of Growth

Paul Semenza, Senior Vice President, DisplaySearch, an NPD Group Company

The successes of the flat panel display industry can be seen everywhere, from the new televisions displacing older CRT (cathode ray tube) sets in the home, to the proliferation of full-color, video-capable screens in mobile handsets, portable media players, and automotive infotainment systems. However, having passed the milestone of $100 billion in revenues in 2007, the flat panel display market is likely to enter a slower growth period. After growing by 17 percent in 2007 and what is likely to be a similar amount in 2008, DisplaySearch expects revenue growth to fall to less than 5 percent per year from 2009 to 2012. Why does slower growth look likely, and what is the industry doing to try to reinvigorate growth?

Slowdown Coming

The industry has based its growth on several key markets: the PC market, first in notebook PCs and then conversion of CRT desktop monitors to flat panels; the TV market, which has seen rapid conversion to flat panels in developed economies; and mobile handsets, in which the smartphone concept has proliferated from business to consumer markets. To some extent, the industry is suffering from its own success. Most of the key markets are near saturation; one notable exception is the conversion to flat panel televisions in the emerging economies. The high levels of saturation in key markets are a major component of the growth slowdown.

Related factors are prices and product mix. Due to investments in new manufacturing plants and equipment, along with very competitive market conditions, the prices of a given size of flat panel tend to fall dramatically over the long term. A key method of maintaining revenue growth in this environment is to move users to ever-larger screen sizes. Here again, the industry has been successful: typical notebook sizes have increased from 10 to 15 inches, monitor sizes from 15 to 20 inches and larger, and TV sizes very rapidly, to the point where they approach 40 inches in some markets. However, there is also a saturation point, at which the typical consumer decides they have a large enough display.

The flat panel display market is increasingly dominated by the thin-film transistor liquid crystal display (TFT-LCD), which is approaching 90 percent of the flat panel display market measured by value. The fact that this technology is so dominant means that manufacturers and their equipment and materials suppliers have an industry standard, which allows them to drive down manufacturing costs. On the negative side, it also means that the manufacturers have to struggle to differentiate themselves in a commodity industry.

The main approach that TFT-LCD panel makers have taken to separating themselves from their competition is through building manufacturing capacity. This allows them to be at the leading edge in terms of efficiency, to drive down their costs through volume purchases, and to be the first to produce the largest panels, which often carry a high profit margin early in their life cycle. Although there are over a dozen large TFT-LCD manufacturers, the top four account for over 70 percent of manufacturing capacity.

Going for Growth

While TV, desktop monitors, notebook PCs, and mobile phone handsets will continue to account for the majority of revenues in the flat panel display industry, growth in all of these categories except for notebooks is slowing down.

Over the next few years, many of the fast-growing applications will be in mobile devices. The leading contender for growth at this point is the emerging product category of the mini-note PC, which are notebook PCs with screens 10 inches or less, typically without any fixed drives, and typically under $500. These products are expected to fill the gap between standard notebook PCs and handheld or tablet devices. From a display industry perspective, they are attractive because the panel sizes are large compared to most mobile devices, but can be made efficiently in fully-paid off factories.

Another fast-growing application is the digital picture frame, which also uses displays smaller than 10 inches (although some are larger) and takes advantage of the ubiquitous nature of digital cameras. Rapid growth is also expected for mobile devices including portable navigation devices, which can be used in or out of the automobile, other automotive displays, and portable media players, led by Apple’s iPod line.

The application that is drawing the most attention from panel makers investing in 8th generation and higher TFT-LCD fabs is public display. This is the one application that has the long-term potential to be bigger than TV, in that the available market – in terms of units and screen size – is not limited by the number of homes. Public display takes advantage of the growing digitization of advertising and other public information, the desire of advertisers to be able to finely target potential customers by time and location, and the growing need to share transportation and other forms of public information.

While revenues for public display applications are currently modest, many panel makers see large potential demand. One of the important aspects of this market is that the display purchase is part of a larger system of hardware, software, and content, and that the purchase decision is based on expected return on investment, both of which could mean less cyclicality in demand. However, prices will need to fall well below current levels to drive mass adoption.

New Technologies to Boost Growth?

One other way for the overall flat panel display industry to increase its potential growth rate is to commercialize new technologies that could create new markets or add sufficient value to existing markets that higher revenues could be realized. With the increasing dominance of TFT-LCD, this has become a very difficult challenge.

The most promising new technology for the past several years has been OLED (organic light emitting diode) displays. This technology promises improvements in image quality, power consumption, physical size, and cost, compared to LCD. However, the growth of OLED has been slower than one might expect given these benefits. In part, this has been due to the nature of display technologies, which take decades to come to maturity (OLED technology is just over 20 years old, and has been in production for just over 10 years). While significant progress has been made in material lifetime and device performance, there is still room for improvement, and production of the most advanced type of OLED, the active matrix version, is still quite limited. More challenging to OLED has been the ability of the large, well-funded TFT-LCD industry to make improvements in performance and cost so as to blunt the advantages of OLED. A key challenge for OLED is that all of the applications it currently is targeting are also served by LCDs, which makes OLED a replacement technology.

A class of display technology that has the potential for growing the overall market is flexible displays. These devices are envisioned as based on plastic, metal, or other flexible substrates, that do not have the weight and fragility of glass. Such displays could be more rugged, and used in many different types of applications not served by glass-based displays. Many different display types have been demonstrated in flexible formats, but the leading contender is electrophoretic, which works via reflection.

The TFT-LCD industry is not staying still either. One key area of technology development is solid state backlighting, most notably using inorganic LEDs. Such approaches enable wider color gamuts, faster response time, and the potential for thinner panels and lower power consumption. Reducing power consumption is particularly important to panel makers, as they have focused on “green” products, and as there is broad awareness that standard TFT-LCDs are very inefficient.

The key issue for technology developments is not only whether they will succeed in the market. It is also whether they will produce additional growth or only displace older technologies. It is likely that the display industry will need a combination of new applications and technologies to accelerate revenue growth.