Shortages loom for large-size LCD panel materials and components

Paul Boughton

Following a acute oversupply in 2004, materials and components used for the manufacturing of large-sized LCD panels are likely to enter a state of shortage in the second half of 2005, iSuppli Corp predicts.

Supply of glass substrates for large-sized TFT-LCD panels, ie panels 10-inches or more in diagonal size, is expected to fall

8 to 10percent short of demand in the second half of the year when measured in area, according to iSuppli's LCD Supply Chain report. Colour filters used for ifth- and sixth-generation LCD fabs are forecasted to experience shortages of 7 to 12percent in the fourth quarter.

The seeds of the upcoming shortages were sown in second half of 2004. The
TFT-LCD industry entered a downturn in the third quarter of 2004 as shipments of panels for desktop PC monitors declined and demand for displays for mobile computers grew only marginally.

Unit shipments of large-sized TFT-LCDs contracted in the third quarter of 2004 on a sequential basis, before bouncing back in the fourth quarter. In contrast, unit shipments rose sequentially in both the third and fourth quarters of 2003.

With the market slowdown, materials used in the production of large-sized panels went into a state of oversupply late last year.

Materials suppliers typically require one quarter to respond to shifts in LCD shipment levels.

Thus, these material suppliers presently are limiting production increases as a reaction to conditions in 2004. Because of this, it is likely that materials production will not keep pace with panel manufacturing in the second half of 2005, iSuppli predicts.
While the glass substrates and ew-generation colour filters will experience the most acute shortages, other parts will not be immune.

Polarisers, TAC film and lamps all are expected to experience varying degrees of tightness of supply in 2005.

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