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Date: 07-06-12

South Korea dominates while Chinese suppliers glow in large-sized LCD panel market in Q1, reports IHS

IHS' iSuppli has released the LCD market tracker for Q1 that reports that Chinese suppliers have represented the fastest growing contingent of the large-sized liquid crystal display (LCD) panel market in the first quarter, while the major South Korean brand continue to dominate. The Chinese suppliers capitalized on rising production and strong domestic demand for 32-inch televisions.

IHS says that the No. 5 Beijing Optoelectronics Technology Co. Ltd. (BOE) of China achieved Q1 shipment growth of 18.6 percent, the best performance among the Top 10 suppliers while the No. 7 player Infovision Optoelectronics Co. Ltd. (IVO) from China had increased its own shipments by a slightly smaller 18.3 percent.

CEC and China Star Optoelectronics Technology from China, who were not ranked among the Top 10, saw the most explosive growth in Q1. They achieved 63.5 percent and 103.3 percent increase in shipment respectively, by far the largest growth in the market.

"The Chinese players are cashing in on the country's fast-growing demand for 32-inch panels used in televisions," said Sweta Dash, senior director for liquid crystal displays at IHS. "Meanwhile, the Chinese suppliers are ramping up production, allowing them to expand shipments at a fast pace. Both BOE and China Star have new 8.5-generation fabs, which will allow them to compete with other suppliers that possess similar next-generation fabrication facilities, especially in the television market. The Chinese manufacturers also are benefiting from new tariffs levied by their government, which are creating challenges for their overseas competitors."

The table below shows the latest Top 10 rankings in the global large-sized LCD space, with market share listings based on unit shipments in the first quarter of 2012 compared to the fourth quarter of 2011. Large-sized LCD panels are defined as those with a diagonal dimension larger than 10 inches.

New tariffs, rising competition in China
1. China's tariffs in April increased to 5 percent for imports of LCD panels sized 32-inches and larger,      up from 3 percent before. The higher tariff has the potential to erode the market share of Taiwanese      suppliers, because they now have such a large market share in China.

2. With overall opportunities tightening in the mature large-sized LCD panel market, partly because of     the rising tariffs and increased competition from China, established suppliers based outside China     are in the process of figuring out their strategies to outmaneuver the competition. Some are focusing     on value-added or more differentiated products, such as high-resolution or 3-D panels, while others     are moving into new TV panel sizes like 39-inch or 50-inch.

3. While the Chinese players focus on the 32-inch panel market, the Taiwanese suppliers prefer to     supply the most efficient panels that could be made in older Gen 7.5 fabs in order to avoid direct     competition with their mainland rivals.

LCD supremacy maintained by Korean suppliers
The South Korean suppliers-LG Display Co. and Samsung Electronics Co. Ltd.-continued to lead overall market share in the large-sized LCD panel business. Together the two South Korean electronic titans dwarfed all other players in the first quarter, accounting for 50.9 percent of global shipments for large-sized LCD shipments. In contrast to the commanding authority of the South Koreans, the remaining 49.1 percent of the market was held by a gaggle of 15 players-six from Japan, five from China and four from Taiwan. The Taiwanese, despite having fewer players, held larger shares individually and collectively than their Chinese and Japanese rivals.

Life's good for LG's large-sized LCD business
1. LG Display Co. continued to speed ahead of archrival Samsung Electronics Co. Ltd. as it widened its     overall share in the large-sized liquid crystal display (LCD) panel market during the first quarter this     year. This was due in part to LG profiting from the quarterly loss in shipments by other suppliers.

2. With shipments of 44.5 million large-sized LCD panels in the first quarter, LG accounted for a huge     28.1 percent of the market and was the undisputed leader in the space. LG's performance handily     beat out Samsung's shipments during the same period of 36.2 million units, allowing Samsung to     retain the runner-up position with a 22.8 percent market share.

3. For the first quarter, LG managed to actually expand shipments by 0.6 percent from a 27.0 percent     share in the fourth quarter. In comparison, Samsung saw 7.6 percent of its shipments vanish from     the fourth quarter, when it held 23.9 percent of the market.

Samsung's struggles
Samsung's 8 percent decline in shipment may have been caused due to factors such as diminished customer base in China, the break-up of its LCD joint venture with Japan's Sony Corp., and the decision by Samsung to focus more on high-end LCD segments in order to improve profitability.

The decline in shipments during the period by the No. 3 player, Chimei Innolux Corp. of Taiwan, also helped LG to secure a bigger share.

Total large-sized LCD shipments worldwide amounted to 158.6 million units in the first quarter, down 3.3 percent from 169.3 million units in the fourth quarter but up 1 percent compared to the first quarter a year ago.

Big Korean domination in big LCD panels
Part of the reason for the overwhelming dominance of the South Koreans was that both LG and Samsung supplied panels internally for their own divisions that make televisions, in addition to partnerships with other TV brands. Such vertical integration was missing in many other players, which could only supply panels to outside clients and had no captive internal markets of their own.

Other players
1. Chunghwa Picture Tubes Ltd. and HannStar Display Corp. from Taiwan are moving away from the      mature large-panel market to the small- and medium-sized LCD space, or even into panels for the      touch screen industry, where greater opportunities are springing up given the increasing      proliferation of tablets and smartphones.

2. HannStar was the only company to fall out of the Top 10 in the first quarter, allowing previous 11th     place holder Tianma of China to take its spot.

Source: IHS

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