TFT LCD makers’ pursuit of the television market has spurred the largest round of investment in manufacturing that the flat-panel industry has ever experienced. As an example of the magnitude of investments, the TFT LCD panel supply will increase by 60% next year, according to iSuppli/Stanford Resources. This will happen despite the approximately $2 billion price tag of a state-of-the-art TFT-LCD fabrication plant.
Samsung, Chi Mei Optoelectronics and Quanta Display started production at their new fifth-generation facilities in the fourth quarter of 2003. By the end of last year, seven fifth-generation production lines were operational.
In this year’s first quarter, AU Optronics started production at its second fifth-generation facility and Sharp commenced manufacturing at the industry’s first sixth-generation site. In all, eight new fabrication sites are expected to become operational in 2004, including LG-Philips LCD’s sixth-generation site, and fifth-generation lines at CPT, Hannstar, Innolux, and SVA/ NEC, which is China’s first fifth-generation facility.
Application Waves Drive Investments
Over the past two decades, the TFT-LCD panel supply has expanded ahead of large-application markets. The graph below illustrates the application waves, and how they correlate to capital spending and the advent of new-generation fabricators in the TFT-LCD industry.
The two major application waves so far have been notebook PCs, which were introduced in the early 1990s, and desktop monitors, which first appeared in the late 1990s. In each of these cases, the TFT-LCD industry invested in “generations,” or groups of plants with similar substrate sizes able to produce numerous panels per substrate. The industry reached a consensus that producing six or more panels on each substrate is the most efficient arrangement. Early fabricators could efficiently produce 10- and 11-inch panels used in the initial notebook PC products, and later moved up to 14- and 15-in. sizes for monitors and newer-generation notebooks.
The substrate area of each generation has increased from a typical size of 0.4 sq. (4.3 sq.ft.) m. in third-generation facilities to 1.4 sq. m. (15 sq. ft.) at fifth-generation plants. Sixth-generation plants will use 2.7-sq.-m. (29 sq. ft.) substrates, and substrates manufactured in seventh-generation plants now in the planning stage will exceed 4 sq.m. (43 sq. ft.)
The Third Wave
This investment progressed at a fairly consistent pace throughout the 1990s, as average screen sizes increased relatively slowly. However, with the focus on TVs, required screen sizes have jumped from 15 to 40 in. and larger. These larger screen sizes need much bigger substrates and television is a huge market spurring an unprecedented wave of investment.
Sharp’s new sixth-generation plant in Kameyama, Japan, uses substrates that are approximately 5 x 6 ft. -- large enough to fit six, 37-in. panels on each unit. When it’s fully operational, the plant is scheduled to process at least 90,000 sheets per month; assuming a 90% yield, the plant could produce 500,000, 37-in.-wide panels monthly.
Combined with the TV set assembly capability built into the back-end of the facility, this one plant alone may be able to produce 6 million large LCD televisions per year. By the end of 2005, six sixth-generation plants could exist; all of them would be equipped for LCD TV panel production. By 2007, seventh-generation labs will be online. This latest investment surge truly signals that manufacturers believe that TV is the third application wave for TFT- LCDs.
Paul Semenza is an executive vice president at iSuppli/Stanford Resources. This article summarizes Semenza’s presentation at the 2004 iSuppli European Briefing Series in Amsterdam on April 27. Contact him at p.semenza@stanfordresources.com
This is article is reprinted with permission from iSuppli/Stanford Resources.
