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Tony Huang, DIGITIMES Research, Taipei [Friday 28 October 2011]
The Greater China region (Taiwan and China) is expected to account for 44.5% of global large-size TFT LCD panel shipments and 42.5% of global large-size capacity in 2011. Geographically speaking, Greater China is the second most important region after South Korea in the panel industry. This DIGITIMES special report offers a comprehensive overview of the development of the large-size TFT LCD panel industry in the Greater China region, as well as the competition and collaboration between China-based players and their peers from Taiwan and South Korea. Abstract 
Taiwan has been the powerhouse in the TFT LCD industry in the Greater China region. It still is, but China is now also emerging as a big player, bolstering the region's importance in the LCD panel industry. The Greater China region (Taiwan and China) is expected to account for 44.5% of global large-size TFT LCD panel shipments and 42.5% of global large-size capacity in 2011. Geographically speaking, Greater China is the second most important region after South Korea in the panel industry.
The rise of China to becoming a major large-size LCD panel supplier is being facilitated both by its role as the world's factory and by its huge domestic demand. Even though the rising salary levels in Chinese coastal areas have been sending manufacturers looking for cheaper labor in inland regions or other countries, the supply chain in China still boasts high efficiency and cost-effectiveness. In the foreseeable future China will remain the biggest production base for end products using large-size TFT LCD panels. DIGITIMES Research predicts China's share of global production of end products with large-size TFT LCD panels will be able to remain above 73% at least until 2013. Furthermore, demand for end products from the domestic market and exporters will continue to require China to import or locally produce large amounts of TFT LCD panels in the next five years. This will enable China's development into a major large-size LCD panel production base.
The current global economic woes may be slowing down China's progress towards becoming a powerhouse in the large-size TFT LCD panel industry. Its own players are still eager to ramp up capacity, but foreign competitors have all delayed their plans to build advanced panel lines in China. But these foreign players may change their mind next year if China raises tariffs on imports of large-size panels. It remains to be seen how much the tariffs may go up. If the increase is small, these foreign players may find it less pressing to speed up their plant projects. But if the tariffs go up to 8-12% from the present 3-5%, profits for panel exports to China will take a significant blow, forcing them to be more active in building their production facilities in China.
Within the Greater China region Taiwan-based panel makers AUO and CMI will still maintain a 30% share or even more of global large-size TFT LCD shipments by 2013, and their China-based competitors have a good chance of increasing their share to more than 10% by 2013, thanks to domestic demand and the support of the Chinese government's tariffs policy.
The DIGITIMES Special Report "Development trends in the Greater China large-size TFT LCD industry" offers a comprehensive overview of the development of the large-size TFT LCD panel industry in the Greater China region, as well as the competition and collaboration between China-based players and their peers from Taiwan and South Korea.
Table of contents Development trends of Greater China large-size TFT LCD industry Development of the large-size TFT LCD industry in China Chart 1: LCD panels imported to China grew nearly 10 times from 2003-2010( US$b) Taiwan's large-size TFT LCD industry Chart 2: Taiwan large-size TFT LCD panel shipments and global share, 4Q10- 4Q11 (k units) Chart 3: Global large-size TFT LCD panel capacity share by manufacturing region, 2008-2013 Large-size TFT LCD supply-demand trends and impact on suppliers Demand Chart 4: Global LCD TV shipments, 2009-2013(k units) Chart 5: Global large-size TFT LCD panel demand, 2009-2013 (k square meter) Supply Chart 6: Large-size TFT LCD panel capacity annual growth by maker, 2009-2013 Chart 7: Global large-size TFT LCD panel capacity, 2008-2013 (k square meter) Impact of South Korea's FTAs with the US and EU Chart 8: Impact of Korea's free trade agreements (FTA) with major economies Fewer incentives for foreigners to set up LCD panel plants in China? Conclusion Demand outlook for Greater China LCD monitor Chart 9: China LCD monitor production and global market share, 2008-2013(k units) Notebooks Chart 10: China notebook production and global market share, 2008-2013 (k units) Tablets Chart 11: China tablet production and global market share, 2010-2013 (k units) TV Chart 12: China LCD TV production and global market share, 2008-2013 (k units) Chart 13: World's largest LCD TV ODM TPV Technology, capacity by geographic region (m units) China total productionof LCD display systems, 2008-2013 Chart 14: China total productionof LCD display systems, 2008-2013 (k units) Conclusion Analysis of operations and development strategies of China LCD panel makers BOE Chart 15: BOE Technology revenue and operating margin, 2006-1H 2011 (CNYm) Profitability Chart 16: BOE revenues and gross margins, by main product line, 2010 (CNYm) Chart 17: BOE annual changes in gross margins, by main product line, 2009-1H2011 Chart 18: BOE, AUO, CMI, CPT, and LGD's annual changes in operating margin, 2006- 1H2011 Progress of capacity expansion Table 1: BOE's TFT LCD production line capacity and applications Chart 19: BOE 8.5G plant's lead narrowed by CSOT in terms of mass production (substrates/month) New production lines in the component supply chain Developing major client relationships Strategy for competition Chart 20: BOE's strategies after mass production of its first 8.5G plant CSOT Capacity and progress of volume production Chart 21: CSOT 8.5G TFT LCD production line capacity roadmap, 2011-2012 (k substrates/month) Component supply chain Chart 22: CSOT 8.5G plant supply chain Chief clients Chart 23: TCL domestic and export LCD TV shipments, 2009-2011 (k units) Significance of cross-investments between Samsung and TCL Group Chart 24: CSOT shareholder change in 2H11 Chart 25: CSOT's plan on client structure Chart 26: China's tariffs on LCD display imports and forecast, 2008-2012 Analysis of China panel makers' competitiveness Tariffs and government subsidies Technology/patents Flexibility of product mixes Financial health of parent groups Business performance First-tier TV clients Second-tier TV clients Chart 27: BOE and CSOT on competitiveness Conclusion Analysis of operations and development strategies of Taiwan panel makers AUO Revenues Chart 28: AUO remains number four worldwide by overall revenues, 2Q10-2Q11 (NT$m) Chart 29: AUO revenues and operating profit margins, 2006-2011 (NT$m) Profitability Capacity Table 2: Capacity and applications for AUO's TFT LCD factories CMI Revenues Chart 30: CMI revenues and operating profit margins, 2006-2011 (NT$m) Profitability Capacity Table 3: Capacity and main applications for CMI's TFT LCD factories Comparing the performance of AUO, CMI and LG Display Chart 31: Revenues and operating profit margins for AUO and LGD, 1Q10-2Q11 (US$m) Chart 32: Operating margins for AUO, CMI and LGD, 2006-1H11 CPT Revenues and profitability Chart 33: CPT's revenues and operating margins, 2006-2011 (NT$m) Capacity Table 4: Capacity and main applications for CPT's TFT LCD factories Development strategies of major Taiwan panel CPT Chart 34: large-size panels accounting for smaller share of CPT shipments, 2Q10-2Q11 AUO Table 5: Analysis of AUO's business strategies CMI Table 6: Analysis of CMI business strategy Conclusion
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