For years, two South Korean giants have dominated the LCD panel industry, but a recent merger in Taiwan has propelled AU Optronics into the running for the top spot.
Fresh competition at the top should ensure LCD makers continue to find new ways to lower prices so they can lure users to buy new LCD TVs, larger desktop displays, and laptop computers with bigger screens. In fact, the big three all continue to invest in new LCD factories designed to lower costs, and they unanimously forecast falling LCD panel prices during the first three months of this year.
AU, the world's third largest maker of LCD screens, merged with Quanta Display late last year, raising its share of the global LCD panel market to nearly match that of Samsung Electronics and LG.Philips. Although the company remains in third place, it is just a sliver of market share away from the top.
It said its work to integrate the new factories acquired in the Quanta Display deal is running smoothly.
The company had already turned Quanta Display's operations profitable after two money-losing quarters previously, CFO at AU, Max Cheng, said. The smaller LCD maker had been suffering against its larger rivals because it couldn't compete as well on cost. In general, larger makers can offer volume discounts to big customers, and gain other cost advantages through mass production.
The merger helped propel AU's LCD panel shipments past Samsung Electronics for the first time ever during the fourth quarter. The Taiwanese company shipped 16.6 million large-sized LCD panels in the fourth quarter, and 24.5 million small and medium-sized panels, it said. Samsung shipped 15.5 million large-sized panels and 24.8 million small and medium sized panels, according to information on its website.
The Samsung figures do not include output from S-LCD, a joint venture between Sony and Samsung that produces large-sized LCD panels used by both companies.
Large-sized LCD panels are described as those 10 inches in size or bigger, such as panels used as the screen part of a laptop computer, desktop monitor or LCD-TV. Small and medium-sized panels are the screen parts of devices such as mobile phones, and GPS (global positioning system) navigation devices.
The shipment figures don't mean AU is already number one in LCDs. The top company, LG Philips LCD, does not break down panel shipments, choosing to give its figure in millions of square meters because the size of panels differs so much. LG shipped 2.3 million square meters of panels in the fourth quarter. Neither AU nor Samsung provide shipment information in square metres.
According to market researcher, DisplaySearch, LG.Philips ranked first in panel shipments last year, followed closely by Samsung, and then AU Optronics. There are only a few percentage points of market share separating the three. The next competitor listed, Chi Mei Optoelectronics of Taiwan, is nearly 10 percentage points away from first place.
By other popular measures used to rank companies in an industry, such as revenue, Samsung comes out on top, with LG.Philips second, and AU Optronics in third. Samsung's LCD business posted fourth quarter revenue of 3.18 trillion Korean won ($US3.48 billion as of December 31, the last day of the reporting period), while LG.Philips' revenue came in at 3.06 trillion won ($US3.34 billion) and AU's was $NT94.65 billion [B] New Taiwan dollars ($US2.91 billion). The nearest competitor to the top three was Japan's Sharp, which posted revenue at its LCD component business of YEN 241.4 billion [B] ($US2.03 billion) for the three months ending Dec. 31.
Going forward, Taiwanese companies appear to be more aggressive in their capital spending (capex) plans for this year. In fact, AU Optronics plans to spend more on new factory production lines this year than any other LCD maker, between $NT90 billion and $NT95 billion ($US2.92 billion). The top end of that range is nearly double Samsung's estimate of 1.41 billion won ($US1.52 billion), which excludes spending on S-LCD. Chi Mei has said it would spend $NT75 billion ($US2.30 billion), making it the next biggest spender after AU Optronics.