The role of the display in a typical consumer product can’t be overstated. Not only are consumers demanding a better viewing experience regardless of screen size, but touch screens are now the primary user interface between users and their devices. The market for displays has become highly volatile and competitive, creating both opportunity and challenge for electronics OEMs.
Displays have become one of the most important items on a typical bill of material, according to Vinita Jakhanwal, Director, Mobile and Emerging Displays and Technology, IHS, during the Webinar Outlook for the Global Display Market: Managing Technology and Business Risk in 2013 and Beyond.
“For device makers, the display spend is bigger than ever,” she said. “It is becoming a larger part of the bill of material and an increasingly important part for device makers.”
The display market falls into two major categories, according to IHS: large-size screens primarily used for TV and monitor applications; and small to midsize screens used in mobile devices and tablets. For panel makers, there are growth opportunities in both segments of the market, largely depending on screen size, technology and application.
Liquid crystal display (LCD), the dominant technology is the display market, has reached its maturity level and its growth has stagnated, according to Sweta Dash, Senior Director, Display Research and Strategy, IHS. New vendors — many of them from China—have entered the LCD market and driven prices down. As a result, display manufacturers are focusing on larger-sized screens (50 inches and above) to increase both their average selling prices (ASP) and profitability.
TVs are the leading application for large sized screens. “The 60-inch-and-above size market is still pretty expensive, but we have seen suppliers entering with $700 large sized screens,” said Dash.
LED backlighting and ultra-high definition (UHD) are two of the features TV makers are adopting to maintain their products’ value. LED backlighting has taken awhile to catch on, says Dash, but is gaining more acceptance: LED backlights’ share of the TV panel market will increase to 71 percent in 2012 and 89 percent in 2013. UHD is still expensive and lacking in content, but IHS expects UHD’s penetration of the TV market will reach 34 percent for the big (50-inch plus) screen market by 2017.
Because of LCD’s lower prices and profitability, suppliers have cut back capacity and aren’t investing in new capacity, Dash says. This could lead to tightness in supply as existing inventory is burned off. “For [OEMs], the market is uncertain; there will be a production shift; we will see tightness; and manufacturers will have to react to changes in the supply chain,” Dash said. “The market will have to be watched very carefully.”
The picture is much brighter for small and midsize displays targeted at the mobile device and tablet market, according to Jakhanwal. Mobile applications such as smartphones, phablets, tablets, automotive are driving growth; emerging technology such as OLEDs and flexible displays will gain market share as they provide important product differentiation in a competitive market (smartphone and TVs) ; and mobile handsets will drive main volumes from 2.3 billion in 2013 to 2.9 billion in 2017, she said.
Because so much digital content is being downloaded onto phones and tablets, demand is increasing for 5-inch to 7-inch displays, according to Jakhanwal. There are still a number of ways display makers can differentiate their products: OEMs are looking for higher resolution, battery conservation, screen flexibility and better touch interfaces. Additionally, she says, smartphones and tablets are beginning to converge into “phablets,” which will require different kinds of display performance depending on their primary use.
The automotive market is also a growth market for displays: driven by demand for infotainment systems, navigation and electric vehicles, automotive display shipments are expected to increase by 125 percent from 52 million in 2011 to 117 million in 2012, Jakhanwal said.
Technology-wise, organic-light emitting diode (OLED) is still expected to replace other technologies, but is still facing production and yield issues. In the meantime, other technologies -- low-temperature polysilicon (LTPS) and amorphous silicon (a-Si) – are providing certain performance advantages over LCDs.
Probably the biggest factor in the overall display market is the increasing penetration of Chinese companies, the analysts say. China display manufacturers are being subsidized by the government and are expanding capacity. The added competition is driving prices down overall; and Chinese consumers increasingly are buying from Chinese companies. As a result, many non-China display makers are setting up facilities in the region, the analysts said.