By David Hsieh, Vice President, Greater China Market

The current economic situation, with slow demand growth and panels in an over-supply situation, has many questioning the necessity for an emphasis on green technology. However, our recent topical report on green technology in flat panel displays shows that green FPD technology is also cost reduction technology in many respects.

Many people believe that green panels are higher cost, but it is not so clear. Sometimes there are higher costs (such as replacement of components with greener components), but in other cases there can be savings (such as replacement of backlight lamps with cheaper optical films). The cost/performance ratio is determined by the technology or process used to achieve a green FPD.

Green Design Methods

This is a good way to achieve green FPD as the cost/performance is high, and it does not necessary entail higher costs. However, the biggest challenge is the design capability. First-tier panel suppliers obviously have better engineering capabilities and more abundant resources to apply green design.

Greener Manufacturing Processes

Depending on production volumes, this can result in lower costs. The reduction or elimination of steps or processes (such as photo masks or color filter patterning) brings the total production cost down.

But a dilemma is the yield rate management. If the manufacturing yields are lower with the new process, then it will have a negative impact on the cost structure. This is why the second-tier panel suppliers are less interested in this tactic.

Using Eco-Friendly Components

This is the fast way for panel makers-no matter their capabilities-to move into green. It does not impact the production yield much, so the cost premium is manageable. However, in many cases, eco-friendly components are higher cost, such as optical films and LED backlights. Therefore, regulations and customer attitudes are the key drivers for this method.

We expect that green component prices will drop rapidly for two reasons.

• As green panel volumes continue to grow, economies of scale will increase and lower costs for component suppliers.
• The market downturn is forcing changes in the negotiation power between panel makers and component suppliers.

Notebook LED backlights are a good example of how the costs can be reduced sharply, helping more panel makers to adopt green components.

A detailed analysis of the cost and performance of these green FPD technologies can be found in the upcoming DisplaySearch topical report Green Technology in Flat Panel Display: Market and Technology Trends.