China is quickly adding capacity in all flat-panel display (FPD) manufacturing segments and is forecast to become the leading manufacturing region in the world for displays by 2018, according to a new report from IHS.
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IHS forecasts a significant shift to happen by 2018 regarding FPD capacity area shares. Source: IHSys (TFT LCDs) trending toward being commoditized and currently suffering from declining prices and margins, China has been increasing its TFT capacity at 40% per year between 2010 and 2018. As a result, the country will account for 35% of the global manufacturing display market by 2018, up from just 4% in 2010, IHS forecasts.
On the other hand, as China’s capacity expands, Japan, South Korea and Taiwan have restricted investments to focus on advanced technologies with capacity in these countries slowing to less than 2% per year between 2010 and 2018. Among the capacity winners in China, BOE Technology Group—with a capacity growth rate of 44% per year between 2010 and 2018—will become the main driver for Chinese share gains. By 2018, BOE will have ramped up more FPD capacity than any other producers except LG Display and Samsung Display, IHS says.
“Despite growing concerns of oversupply for the next several years in most parts of the display industry, there is still little evidence that Chinese makers are reconsidering or scaling back their ambitious expansion plans,” says Charles Annis, senior director of FPD manufacturing technology at IHS. “On the contrary, there continues to be a steady stream of announcements of new factory plans by various regional governments and panel makers.”
In order to shift the economy to higher technology manufacturing and increase domestic supply as well as support the gross domestic product (GDP) in the country, the central government of China has generally encouraged investment in FPDs. According to IHS, the provincial governments inside China have become the main enabler of capacity expansion with product and technology subsidies, joint ventures and other direct investments. In return, new FPD fabs increase tax revenue, support land value appreciation, increase employment and spur local economies.
Charles Annis, senior director of FPD manufacturing technology at IHS“China currently produces only about a third of the FPD panels it consumes. However, by rapidly expanding capacity, panel makers and government officials are expecting to double domestic production rates in the next few years and are also looking to export markets,” Annis says. “How excessive global supply, falling prices and lower profitability will affect these plans over time is not yet exactly clear. Even so, there is now so much new capacity in the pipeline that China will almost certainly become the top producer of FPDs by 2018.”
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