Brazil and the Display Industry
September 18th, 2008By John Jacobs, Director of Notebook Market Research
In the 1980s, the US decided not to invest in TFT LCD manufacturing. Instead, manufacturing began in Japan, and then spread to South Korea and Taiwan in the 1990s, followed by China in the last few years. At present, two Korean panel makers—LG Display and Samsung—hold ~44% revenue and area share of the TFT LCD industry. TFT LCD manufacturing is likely to spread to include India.
The display industry sees Brazil, and the rest of Central and South America, as having a great, and as yet, untapped potential. Simply put, the industry looks at a population of more than 380 million people in South America, compared to 335 million for the US and Canada, and begins to dream of achieving the same level of TFT LCD penetration in South America as exists in North America. To provide some perspective, in Q2’08, almost 11 million notebook PCs, almost 10 million monitor panels, and almost 24 million LCD TVs were shipped into North America. So, with a comparable population size and economies that have been steadily growing, the entire display industry is eager to penetrate and grow the market in South America.
However, there are a number of challenges that must be addressed before the market can start to reach its potential, and in many countries in the region they are being addressed. There is a substantial income disparity between the wealthiest segments and poorest segments of the populations in all the countries in the region. While DisplaySearch is not in the business of offering political advice, I do recall that John F. Kennedy said, “A rising tide lifts all boats.” In other words, growing the economy and creating opportunity for the poorer members of the society to increase their standard of living will help create and grow the all-important middle class, an essential group of consumers.
Like North America, there are a number of free trade agreements that govern many of the countries in South America, like FTAA (Free Trade Agreement of the Americas) and MERCOSUR (Southern Common Market). Also of particular note is USAN (Union of South American Nations) whose goal is to create an entity that in many ways resembles the European Union, which would remove many of the barriers to trade between member nations.
Currently, the only international TV brands with assembly south of Mexico are LGE/Philips and Samsung, both of whom have facilities in Brazil. Given the history of the flat panel market, and the current status of manufacturing of panels and final assembly of the variety of electronics that use TFT LCDs, the best opportunity for investment in Brazil in display-related industries is final assembly of flat panel monitors and TFT LCD or PDP TVs for end markets throughout Brazil and the rest of South America. Additionally, this would extend to include notebooks and desktop monitors. Another option would be to partner with a local brand (for example, Positivo in Brazil) to help grow the market.
DisplaySearch is keenly focused on this market and is implementing measures to expand our coverage of the market. If you are in town, please note that I will deliver the keynote address at LatinDisplay 2008 (http://www.abinfo.com.br/latindisplay) which will be held in Campinas, Sao Paulo, November 17-20. The event is being promoted by the Latin American SID Chapter, the Brazilian Network on Displays (BrDisplay) and the Ibero-American Network on Displays. Come by and see me!
