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EPTE Newsletter from Japan - More Investment in FPD Manufacturers

Topics of the Week

More Investment in FPD Manufacturers

Sangyo Times, a major Japanese industrial media group recently reported the investment plans for several large FPD (Flat Panel Display) manufacturers from Japan, Korea and Taiwan.  The article focused on their flat TV applications and challenges facing these manufacturers.  Severe competition and huge investments, has turned the market oligopolistic, a condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors.  Currently, there are only eleven primary TV-FPD manufacturers in the world and they can be divided into two segments: the first group specializes in LCDs (Liquid Crystal Display), and the second group specializes in PDP (Plasma Display Panel).  Listed below are the manufacturers and the Flat Panel Display segment they are associated with:

LCD:  Sharp (Japan), Sansung Electronics (Korea), LG Philips (Korea), AUO (Taiwan), CMO (Taiwan), IPS Alpha (Japan)

PDP: Panasonic (Japan), Samsung SDI (Korea), LG Electronics (Korea), Pioneer (Japan), FHP (Japan)

A former technology co-developed by Toshiba and Canon, FED (Field Emission Display), was dumped by Toshiba, and the scheduled roll out has been postponed.

The strong market demands for large size FPD TV has manufacturers quickly shifting gears in terms of enlarging the size of the mother glass substrate.  Sharp has plans to build the 10th generation lines for the next volume production plant, which will be located in the seaside area for ease in transporting materials. The mother substrate size will be 2850 mm x 3050 mm.  

Most of the FPD manufacturers, excluding LG Philips and IPS Alpha have aggressive investment plans to expand manufacturing capacities, requiring more than 2 billion dollars to build new plants supporting the FPD panels for large size TVs.  Sharp forecasts its 10G line plant investment to top out at 5 billion dollars, and expects the building to be larger than semiconductor plants. There are not many companies that can afford such a big investment. 

One difference between the FPD and semiconductor industries is the amount of consumption for materials and assembly.  An FPD product utilizes a lot of raw materials, circuitries, components and interconnection devices.  This forces vendors to invest in inventory to adequately supply their FPD manufacturing customers and eliminate out of stocks.   The FPD industry will soon surpass the semiconductor industry in terms of size.  

Leading manufacturers such as Sharp and Panasonic still face an upward climb to maintain profitability.  They are convinced the flat panel display market will show continuous growth over the next five or ten years; however, yearly price cuts between 20 to 30% requires market expansion and lower costs.  They have to build bigger plants and upgrade the manufacturing process every two or three years.   Lower manufacturing costs from a big volume plant can only be realized when a high operation rate for the line is maintained.  To keep high operation rates, manufacturers have to offer lower prices to attract customers. Unfortunately, consumer market demand is not consistent, making it difficult to operate at a 100% production level.

LG Philips (LPL) could be the first to fall in this constantly changing industry.  LPL invested a large stake to expand manufacturing capacity; however, in a softening market, production outpaced orders, and the company have posted significant losses.   LPL may not survive without an infusion of capital from outside investors.  Other manufacturers are facing the same dilemma, and need to act quickly and decisively.

Currently, conditions in the market place are relatively slow, and prices are weakening. This is a crucial season for FPD manufacturers.   A couple of companies already announced suspensions of their investment plans.

Dominique Numakura, DKN Research (dnumakura@dknresearch.com)Headlines of the week

1.      Nikkan Kogyo Shinbun (Major industrial media in Japan) 2/5

Major semiconductor manufacturers in Japan have been expecting lower revenues than original plans, therefore they have been declining the forecast.

2.      Taiyo Yuden (Major device manufacturer in Japan) 2/5

Has acquired Show-Ei Electronics, a manufacturer of power energy devices to expand the product lines.

3.      SMK (Major connector manufacturer in Japan) 2/5

Has rolled out a new small connector series "CLE9108-4101F" for micro SD memory card. They are 78% smaller than previous models.

4.      Matsushita Electric Works (Major PWB material supplier in Japan) 2/6

Will invest 2.2 billion yens to double the manufacturing capacity of multi-layer board materials in China plant to 12 million square meters per year.

5.      Display Bank (Market research firm in Korea) 2/6

The shipment of 40" LCD TV has overwhelmed PDP TV in 2006.

6.      FDK (Major component manufacturer in Japan) 2/7

Will expand the manufacturing capacity of chip type power inductor devices to 30 million units per month by March 2007.

7.      Epson Toyocom (Device manufacturer in Japan) 2/7

Has developed the world thinnest quartz device (0.6 mm thick).

8.      Seeks (Device manufacturer in Japan) 2/7

Will start the volume production of LED boards targeting LCD TV, bulbs of automobiles, room lighting, etc.

9.      Kyoei Sangyo (Middle class PWB manufacturer in Japan) 2/7

Has established a quick turn system for build-up boards. The whole process from design through assembling for 6 layer boards can be completed in 14 days.

10.  Eastern (Major PWB manufacturer in Japan) 2/7

Expects 24 billion yens revenue for the fiscal year ending March 2007, 17% growth from the previous year. Thin substrates for IC packages lead the business.

11.   Chi Mei Material Technology (LCD material supplier in Taiwan) 2/7

Has started the volume production of the polarization films with a capacity of 4 million square meters per year in the new plan of Tainan-city in Taiwan for the LCD panels of CMO

12.  Taiyo Yuden (Major device manufacturer in Japan) 2/8

Has commercialized the world smallest coiled inductors (6 mm square). The devices are produced in Philippines Plant.

Interesting literatures about the packaging industry

Articles of DKN Research

1. New "2006 Global Material Projection for Flex Circuit" DKN Research, October, 2006. http://www.dknresearch.com/Products.html

2. "Introduction for the Printed Circuit Boards of Car Electronics, Flexible Circuits", (Japanese only), Dominique Numakura, Nikkan Kogyo Shinbun, June, 2006, 2400 yens.

3. New "The latest semiconductor package, Part XXI, Teardown Analysis of FDD, CD Drive", Dominique Numakura, Electronics Packaging Technology, January, 2007 

4. "Five Year Projection of the Global Flexible Circuit Market" Robert Turunen, Dominique Numakura and James J. Hickman, The Board Authority, Volume 7, August, 2006

5. "Technical Trends and Market Projection of the Materials for the Flexible Circuits", (Japanese only) Dominique Numakura, Denshi Zairyo, October, 2006

6. "Leading Edge Material and Application of Polyimide (Materials for the Advance Flexible Circuits)", Dominique Numakura, CMC publication, August, 2006

7. New "Business Trends and Technology Trends of the HDI Flexible Circuits -

Roadmap for the Ultra High-Density Advanced Flexible Circuits", Dominique Numakura, KPCA, October 31, 2006

From the Major Industry Magazines

1. "Innovative Solutions for Leading Edge Designs", George Milad and Mario Orduz, CircuiTree, January, 2007.

2. "2007: The Year of HDI?", Mike Buetow, Circuits Assembly, January, 2007.

3. "Acoustic Imaging of Embedded ICs", Tom Adams, SMT, January, 2007

4. "Microminiaturization, Motorola Style", Aroon Tungare, Printed Circuit Design & Manufacturing, January, 2007.

5. "Fluxless Wafer Bumping by Electron Attachment", Christine Dong, Richard Patrick, Eugene Kawacki and Gregory Arslanian,  Advanced Packaging, January/February, 2007

6. "From Chips to Systems via Packaging - A Comparison of IBM's Mainframe Servers", Hubert Harrer, George A. Katopis and Wiren Becker, IEEE Circuits and Systems Magazine, 4th Quarter, 2006

7. "Under the Hood-Latest DESIGN GEMS Unearthed",  presented by EE Times and techonline, December 2006