Will New Capacity Increase Over-Supply in Mobile Phone Panels?

By David Hsieh – Vice President, Greater China Market, DisplaySearch
and Shawn Lee – Analyst, DisplaySearch

For mobile phone panels and other small/medium (<10″) TFT LCD applications, Q4 and Q1 are the slowest part of the year due to the consumer electronics demand cycle. Sales of mobile phones and devices like digital still cameras (DSCs) and portable navigation devices (PNDs) are highest in Q4, so purchases of displays for those products tend to occur in Q2 and Q3. Because of this seasonality, prices for displays for products like mobile phones usually fall in Q4 and Q1, as mobile phone makers adjust their panel inventories, as DisplaySearch research shows.

Over the past several years, most of the new TFT LCD investment has been in Gen 7 and higher fabs for TV panels; these new fabs allow older fabs such as Gen 4 to be switched from notebook panel production to small/medium production. But the overall increase in production capacity for small/medium panels has been limited. Recently, however, new capacity dedicated to small/medium panel production, including Gen 5, has been brought on-line. This could increase the over-supply of mobile phone panels, especially if the capacity is added during the slow demand period:

• BOE is ramping up the first phase of its Gen 4 (730 × 920 mm) fab in Chengdu, China, with 30K/month capacity. The first product will be 2.4″ mobile phone panels.
• HannStar has shifted some of its Gen 5 (1200 × 1300 mm) capacity to mobile phone panels, started shipping this quarter, and plans to increase production in Q1′10.
• CPT is planning to re-start one of its Gen 4 (730 × 920 mm) fabs, which has been idle since 2008, in Q1′10, and will produce mobile phone and other small-medium panels.
• Tianma is increasing the capacity of its Gen 4 (730 × 920 mm) fab in Shanghai, China, from 40K/month in Q3′09 to 60K/month by Q4′10.
• Hitachi is shifting capacity of its V3 line (730 × 920 mm) to LTPS from in Q1′10.
• LG Display will start ramping up its Gen 4 (730 × 920 mm) fab in Paju, Korea, focusing on mobile phone panels.

There is some concern among panel makers that all this new capacity will increase over-supply and push down prices of mobile phone panels, as well as applications like DSC. It will be important to watch the impact of this new capacity on mobile phone panel prices.