The available area-fab capacity area for both liquid crystal displays (LCD) and active-matrix organic light-emitting diode (AMOLED) used in tablets is forecast to expand by nearly 80 percent in 2013, as panel suppliers expand their manufacturing capacity to accommodate booming consumer demand, according to an IHS iSuppli Tablet Displays Market Tracker Report from information and analytics provider IHS.
Available area-fab capacity this year for making tablet displays is expected to reach 11.7 million square meters, a stunning 78.2 percent increase from 6.6 million square meters last year. This year will mark the third consecutive year of expansion for the tablet display industry.
Growth in the market is driven by high demand from top original equipment manufacturers (OEM) like Apple, Samsung, Amazon, Barnes & Noble and Asus. Tablet display shipments are expected to reach 239.1 million units in 2013, up 57.8 percent from 151.5 million units in 2012.
Capacity expansion in 2013 for the tablet display market, in response to growing demand, is being enabled by some significant actions among some of the industry's top suppliers. One key move is the expansion of tablet display production at larger-generation fabs that traditionally produced panels for devices like monitors, televisions and notebook PCs.
The expansion of tablet display production at the larger-sized Gen 6 fabs will be led by Taiwan's Chunghwa Picture Tubes and Japan's Panasonic LCD. This is expected to cause the combined tablet display manufacturing capacity for the two companies to increase to 1.2 million square meters in 2013, up from 262,100 square meters in 2012.
The move to the even larger Gen 8/8.5 fabs will be led by South Korea's LG Display and Samsung Display in tandem with Panasonic LCD, enabling overall expected capacity to increase to 5.5 million square meters for 2013, a 130 percent year-over year boost from 2012.
The increased licensing of wide-viewing-angle (WVA) technologies like in-plane switching (IPS) and fringe field switching (FFS) is also expected to boost the available tablet display capacity to top OEMs. Availability of WVA display capacity will aid in supporting faster demand growth in high-resolution displays.
Agreements recently have been established that allow WVA technology patent holders to utilize the capacity of large fab operators.
The most recent example is the deal between AU Optronics and E Ink/Hydis, wherein the two companies will cross-license technologies like advanced FFS (AFFS) and high-performance FFS (HFFS/FFS+). E Ink/Hydis is expected to make modules for AU Optronics; in return AU Optronics will supply thin-film-transistor (TFT) backplanes to E Ink/Hydis for mobile devices.
More agreements like this are expected in the near future, boosting the number of potential tablet display suppliers for the top OEMs.
With tablet display demand growing robustly this year, panel suppliers are feeling pressure from OEMs to expand their tablet capacity and reach sufficient production yields.
One major challenge that suppliers are expected to face during initial production at the larger fabs will be reaching the appropriate yield levels. The goal to make improved-specification and higher-performance displays could also impact initial production yields, and suppliers likewise may find their yields challenged by the use of new technologies.
While hurdles remain, optimism is apparent among display suppliers for 2013. Demand is expected to remain strong from top OEMs amid a brightening economic outlook, and capacity expansions will eventually lead to larger volumes and better economies of scale.
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