DisplaySearch FPD, San Diego, CA
March 1-2, 2011
The first day of the DisplaySearch FPD conference highlighted the important shifts in the FPD display market. This is being driven by the saturation of HD FPD televisions in mature markets, the role of the smart phone and the long term adoption of display technologies such as OLED. At the same time Apple is posed to be the largest customer of Samsung and has made significant investments in LG. Apple is having an impact to FPD supply chain due to its volume and technology needs.
Growth is returning to the FPD industry but at a slower pace. In 2009 the market contracted significantly from $105B in 2008 to $90B in 2009. In 2010 it rose back up to $115B but growth is expected to be more modest. Today SmartPhones are the growth driver in the market.
In the television market, the growth has shifted to emerging markets but the profile of the buying patterns is quite different. Clearly price is a factor but the screen size is in the 30” to 39” range, which is in the highly commoditized sector.
The PC market is going mobile with the emphasis on the slate form factor. The Netbook market is predicted to be virtually wiped out by the slates by 2014.
The dynamics around the generation of fabs has become more complex. The continual transition to later generation of fabs was not technology, as in semiconductor fabs, but the large glass substrate. Thus earlier fab generations are important but only for smaller size displays. For example, Gen 5.5 fabs are the lines of choice for LTPS and AMOLED fabrication. The slowdown in large screen TV buying due to market saturation has caused the investments in Gen 11 fabs to be delayed.
China is also making an investment in FPD fabs but this is for Gen 8 and some Gen 7. This supports displays in the 32” to 50” form factors and is consistent with its internal market.
The small/medium panel sizes, suitable for phones, is recovering from the recession and projected to grow from $25B in 2010 to $40B in 2015. However, the large panel market will remain static at $91B over that same period.
The introduction of the Apple Retina display has also changed the market. The iPhone has a 320ppi display which has it set apart from all other displays, including those on PCs and monitors. As a result it is driving the use of LTPS process technology, which is again best supported by Gen 5.5 fabs. DisplaySearch estimates that in 2010 80% of the small/medium product is a-Si but this will drop to 70% by 2014 as the transition to LTPS continues.
LED backlighting has now passed over 50% penetration of FPD production.
The use of touch technologies has also caused a shift in the production of panels. AUO, CMI, CPT, HengHao and Cando are planning on over 50% and up to 80% of their production to be with Touch panels.
In terms of technology roadmap all segments of the industry, from TVs to Mobile PC are moving the thinner panels and slim bezels. These same segments are expected to also support 3D and touch.
LG on its P3 and P5 fabs is making LPTS and IPS displays for the iPad. Only a small quantity is being made by Sony for the iPad.
With the acquisition of Chimei Innolux by Foxconn, it has become a major player in the integrated supply chain for CE. It is increasing becoming one stop supply for LCD TV brands, Notebooks, Monitors and mobile phones. It was stated that in this latter category Foxconn is the supplier for Apple, Nokia, Motorola and HTC. It is expected that Foxconn will merge with Hitachi Display and further expand its IP ownership in display technology.
DisplaySearch outlined a shift in the supply chain where the business model is changing to the integration of Backlight, Module and System as a single supplier (BMS). This has been necessitated by the continuing price pressures in the market.
The competition between LG and Samsung is intense with LG ahead and increasing its lead, in terms of unit production. In Q4 of 2010 LG made 16.5m panels while Samsung did 13.5m panels. This was in the TV, Monitor and PC market. LG is making a significant commitment to OLED, where it will go directly to a Gen 8 fab. Both LG and Samsung are making significant investments in 3D technology so that each seeks to have panels which are superior in the market.
In OLED production Samsung is building up the supply base in Korea to lower the costs of the panels, while LG, who has not yet entered production, and it is still reliant on outside suppliers. The cost of organic materials is very high, as much as $300/gram. It is projected that the material market will reach $2.5B by 2015. Samsung is developing a flexible AMOLED production capability with the support of the Korean government. The total investment in OLED is expected to be $18B in the next 5 years.
Corning Predicts the Market
Corning provided its view of the market and its future products.
Trends in handheld devices will be driven by wireless video content along with the need to support emerging markets. PCs, however, will be under pressure to provide touch capability with the increasing importance of emerging markets. Corning predicts the growth being in tablets with only small growth in notebooks, the elimination of netbooks will happen and desktops declining.
In its analysis of emerging markets, a market trip is reached in emerging markets when the ASP of the computers reaches 8% of the GDP per Capita. It was shown that has been reached in Brazil and close behind is China and more distant is Indonesia.
The LCD TV market will struggle with design differentiation and the need to have products of emerging markets.
Corning did an extensive analysis of the replacement trends for televisions. It was stated that the worldwide trend in CRT replacement was 9 years but that LCD replacement, largely driven by the improvement in technology, will be at 6 years.
All of this assessment leads Corning to believe that the glass demand of FTD will grow by 2B sq ft. of glass by 2014.
The technology demands in these markets include: thin, slim bezel and touch. Corning stated that 3.9mm TV would be available for sale this year.
Corning is now supplying .5mm glass. It is sampling for the mobile market .3mm. Corning is also developing a 50 micro glass for flexible and rolled display products.
Increasingly the cover glass on mobile products is playing an important role. Its brand of Gorilla glass, at .7mm thick, has achieved wide usage, in particular on the iPhone.
3M Predicts POE Televisions and USB Powered Monitors
The television industry is under significant pressure to reduce its power consumption. The pace of goals and standards for energy consumption continues to increase. In the US Energy Star Program level 6 will be released in Q3 2011. The financial incentive program is down to 40 watts in January 2011.
3M extrapolated that with continuing declines in power that televisions could be powered in emerging countries with POE. Taking this a step further, PC monitors may be able to be powered over USB.
Touch Screens Market Growth Abounds
DisplaySearch showed that touch screen shipments were at 800m units in 2010 and a market of $4B. This is expected to grow to $11B in 2014. Projective Capacitive is expected to grow to $10.5B by 2014, also. In the cell phone market touch is projected to achieve 50% penetration by 2014.
Financial Analysis of the Retail Market Sector
Matthew Fassier, Goldman Sachs, provided a stark assessment of traditional store retail, which includes office supply, Best Buy, Radio Shack, Borders and others. This category is being decimated by ecommerce and mass marketing, e.g. WalMart and Target. $10B in market cap has been lost by large box retailers as they seek to maintain their position as CE outlets. Amazon has captured more than $40B in market cap in the same time.
Retail outlets have tried a number of means to improve their ability to stimulate sales, which include.
- In retail the concept of in-store traffic linked to content, such as new movies on Tuesday, is fading.
- Services provided at retail are a hard play. An example which Matthew questions is the value of Geek Squad. He does not see that it has an economic value to Best Buy company.
- Big box retail has tried to link television set purchases with upgraded cable or DSL services. However, this is a questionable proposition because the retailers offer nothing that the service providers do already.
- Best Buy is moving into mobile.
To survive large box retailers need to change the model. For example, Best Buy has retreated from China and Turkey, stopped superstore growth. Other major changes are required. This includes downsizing the retail outlets and adjust the pricing.
2010 was the year of the 3D bust. It remains to be seen if this hole will be filled in 2011, in spite of the strong push at CES.
He shares a concern that connected televisions do not have a unique market position. There are many ways to accomplish a connected TV experience outside of the televisions set – STB is an example. Thus, buying a new television and signing up with the cable company to get the necessary connection at the retail outlet makes little sense. The consumers are well informed about their service provider.
Historically he noted that when penetration of technology, especially televisions, reached 20% the $ growth of the category flattens. That is, there is still unit growth but the $ growth flattens as the prices erode.
Matthew’s assessment is that there will be 35% cannibalization of netbook and notebook sales in 2011 from tablets.
Display Search talks about the PC and Tablet Market
PC are at a crossroads. Tablet PCs and SmartPhones do everything the PCs were originally designed to do. Setting our use expectations about the high end of the PC technology over shoots the consumer need.
DisplaySearch predicts that by 2017, 75% of all the PCs will be mobile. The mobile PC market includes: notebooks, netbooks and tablets and this will be at 286M units in 2011. The share of the market for tablets will rise from 8.6% in 2010 and reach 36.3% in 2015.
The desktop PC market is being driven by emerging markets not in the mature markets. It is their view that one of the reasons that the netbook will fall is the lack of differentiation. Has the PC market found what it is looking for to grow the market– yes – tablets.
DisplaySearch has a view of the tablet market which moves commodization beyond 24 months. They see the wave of low cost tablets which will flood the market in the next 12 months as being transitory. Their estimates are that 70% the first year sales, assumed to be 2011, and 30% in 2012 will come from companies that will fail. The market will be driven by name OEMs and the OS – Android, Apple iOS and WebOS. These companies will bring quality and help establish the market and compete with Apple. Thus, the value of Android to drive significant market expansion leveraging low cost hardware is unlikely, at least in the near term.
Samsung Perspective on Tablets
Samsung began by announcing that it has the # 1 Android tablet with 2 million shipped in 94 countries and 200 mobile carriers. They characterized the tablet as used in three areas: movie video, web and e-books. Now is the time for the tablet to reach out to the mainstream, not just the technically savvy. An advantage of the Samsung tablet is its hub services: the Media Hub and Social Hub. The Media Hub is claimed to bring the best quality content to the devices. Is also claimed that Samsung tablet users generated 25% greater revenue/transaction than video content purchase on a Smartphone.
Samsung took a forward looking position. They predict that the future tablets will leverage Context Aware applications, cloud based solutions and make an entry into the medical marketplace. Currently Samsung is working on pico projectors, video conferencing, telemedicine and table projection for the tablet. Another capability for the tablet is IR vision which will allow for night photos without flash and fun in the dark. Samsung also sees a bright future for NFC, which has been enabled by Android. Another capability they are planning on is wireless charging, as soon as 2010.
DisplaySearch Examines the Television Market
DisplaySearch has a bullish view of the future of television.In spite of steady ASP erosion over the last 3 years, in 2010 the FPD television market showed a rise in units by 32% and revenues by 18%., at the same time the ASP declined 11%. But the situation in North America was worse: 6% rise in units, 3% decline in revenues based on a 8% decline in ASP. Pricing analysis shows that 89% of the television units sold are <$1,000. At the same time, the premium features, such as LED backlighting, no longer command a premium. As the reduction in these premiums happen the adoption rate rises significantly. The same applies to 3D – as the premium declines the buy rate rises.
The table has finally turned on plasma. In Q2 and Q3 plasma televisions were severely discounted and they lost to LCD panels.
In the end DisplaySearch expects that the North American TV market will continue to grow. They predict a rise in units from 43m in 2011 to 52m in 2014.
DisplaySearch is more cautious than most about 3D but its numbers are bullish. They show 3.2m units sold globally in 2010 and growing to 18m units in 2011.
In the SmartTV market DisplaySearch sees a trend of an emerging product category. The problem is that the OEMs are seeking other business models around SmartTVs. DisplaySearch cautions that there are many ways to create SmartTVs and the STB is certainly one.
The connected TV market is estimated to be over 60% of the units shipped in 2014. The WW unit volume is slightly above 120M units in 2014. The emerging market of China and Russia will play an important role in the connected TV market.
The definition of the Smart TV includes:
- Operates beyond the Walled Garden
- Can be adapted by the consumer with apps and widgets, at a minimum.
- Advanced user interface
- Networked with other devices in the home.
DisplaySearch also sees a fragmented market as basic services become common place and the Smart TV is positioned at the high end. DisplaySearch poses the question: will TVs be subordinate to handsets?
DisplaySearch Speaks on Mobile Display Technology
The Wave Report spoke with DisplaySearch about key mobile technologies.
MEMS based displays may not be able to compete with the high quality displays which consumers have come to expect and use on the SmartPhone. In spite of the power advantages it is expected that, from a consumer perspective, 90% is not good enough.
LG and Samsung have already partnered with each of the two Quantum Dot suppliers, Ocean NanoTech (Samsung) and QD Vision (LG). This is still in the research category. Some Quantum Dot technology has been used for color conversation in OLED but not in the mainstream for display. Samsung has a demonstration example. But there is no indication that Quantum Dots are on any product road map at Samsung. LG plans on announcing a Quantum Dot display in April 2011 with QD Vision. It is highly unlikely that quantum dots were used in the MWC LG exhibition of Black displays. The view of DisplaySearch is that Quantum Dot technology is at least 2 years from mainstream.
LTPS is the technology of choice for edge to edge displays because the drivers are not required at the edge of the display. This accounts for one of the increased investment in LTPS and its rising market share compared to a-Si.