Taipei, Saturday, July 26, 2014 00:04 (GMT+8)
partly cloudy
Taipei
26°C
Digitimes Research: Melfas eyes top notch in Korea touch panel industry
Ricky Tu, DIGITIMES Research, Taipei [Wednesday 26 March 2014]

Samsung Electronics' mid-range and entry-level mobile devices (smartphones and tablets) in 2013 mostly adopted touch panels using thin-film technologies such as glass-film-film (GFF) or glass-film (G1F). Because the key component, the indium tin oxide (ITO) transparent conducting film (TCF), had been in short supply since the second half of 2012, Samsung decided to adopt G1F technology, which uses fewer ITO films compared to GFF technology for its entry-level/mid-range products. However, the strategy has triggered a reshuffle in Korea-based touch panel makers' rankings in terms of revenue performance.

Samsung's main touch panel supplier is Korea-based Melfas, which focuses on developing G1F technology. Melfas's revenues for the first three quarters of 2013 were KRW495 billion (US$458.18 million), up significantly from the KRW191.6 billion of the entire 2012, approaching fellow maker Iljin Display's KRW510.3 billion and surpassing Smart Mobile Application Company's (SMAC) KRW415.8 billion for the same period.

But Melfas still has weaker operating profits compared to GFF suppliers Iljin Display and SMAC. This shows that G1F's yield rate is still not as stable as that of GFF.

ITO film shortages have started easing since the second half of 2013. If G1F continues to see yield rate issues, Samsung may stop using G1F touch panels in 2014. To further reduce its mobile devices' thickness, Samsung is expected to start adopt more slim GFF and GF SITO (GF1) touch panels.

Slim GFF is able to reduce the thickness of a touch panel by shrinking the ITO film's thickness. In 2014, Iljin Display and SMAC will both shift some of their capacities to produce slim GFF touch panels. Meanwhile, to avoid the impact created by Samsung stopping using G1F, Melfas has developed GF1 technology that only uses a single piece of ITO film, similar to G1F. GF1's yield rate is also easier to improve.

On the other hand, Korea-based LG Innotek, an affiliate of LG Group, is currently supplying GFF and glass only (G2) touch panels and the company's revenues from related businesses rose significantly from KRW66.3 billion in 2010 to KRW560 billion in 2013. However, LG Innotek is still facing challenges such as raising its G2 yield rates and selling products to non-LG clients.

If Samsung stops adopting G1F touch panels, Digitimes Research believes Melfas's GF1 production will be crucial to sustaining its business in 2014.

Content from this blog post was provided by the Digitimes Research Tracking team, which focuses on shipment data and market trends in the global mobile device supply chain. Digitimes Research provides quarterly tracking services for market sectors such as Global Tablet, China Smartphone, China Smartphone AP, China Touch Panel, Taiwan ICT and Taiwan FPD. Click here for more information about Digitimes Research Tracking services.

Analysis of China's revised domestic semiconductor industry goals

RESEARCH EXTRAS | Jul 16, 18:09

Facing a funding shortage for local IC manufacturers, the China State Council in June 2014 published guidelines to strengthen government support for China's semiconductor industry, while stating the short-, mid-, and long-term goals for the related industry supply...

The transition to 4k TV - UHD TV market forecast, 2014-2017

RESEARCH EXTRAS | Jun 26, 13:59

Ultra HD TV vendors are facing challenges due to an overall slowdown in the TV industry and are concerned whether relative supply chains can provide compatible Ultra HD content and services. However, trends show that content makers as well as panel and chip makers...

Taiwan notebooks – 2Q 2014

TAIWAN ICT | Jul 23, 12:53

Taiwan's notebook makers saw an unexpected sequential rise in shipments in the second quarter after the end of Microsoft's support for Windows XP generated a wave of replacement demand. Compared to the same period of last year, their shipments still dropped....

China smartphone market and industry – 1Q 2014

CHINA SMARTPHONE | May 15, 15:08

This report is divided into two sections; the first covers the China smartphone market, including shipments from international players and China-based players. The second section covers the China smartphone industry and covers shipments from local makers in the...

Taiwan LCD monitors – 1Q 2014

TAIWAN FPD | May 13, 15:41

Monitor shipments from Taiwan makers declined in the first quarter of 2014 mainly due to seasonality. And both upstream LCD panel suppliers and downstream system vendors remain conservative about the monitor market in the second quarter.

Greater China touch panel shipment forecast through 2015
  • 2014 global high brightness LED market, trends and shipment forecast

    For the global LED lighting market, the market size will reach US$25.82 billion in 2014 or a market penetration rate of 23.4%. This is attributable to exponential shipment growth for light bulbs, tubes, and directional lamps.

  • Greater China touch panel shipment forecast through 2015

    This Special Report provides forecasts through 2015 for Greater China touch panel shipments with breakdowns based on technology (glass, film, resistive), application (smartphone, NB and tablet) and by firm.

  • 2014 global tablet demand forecast

    This report analyzes the main players, their strategies and shipments forecasts for 2014, as well as other factors contributing to either growth or decline in various segments within the tablet market, with a particular focus on Apple, Google, Samsung, and Microsoft, along with whitebox vendors.