Glass Substrate Supply Tightens Again
By Shawn Lee – Analyst, DisplaySearch
2009 is turning out to be a roller coaster for TFT LCD glass substrate supply-demand. The year began at the bottom of one of the worst down-turns in the history of the industry, with panel fabs and glass tanks shut down, particularly in Taiwan. Starting in Q2′09, panel makers began to bring capacity back on line much faster than glass supply could keep up. Then in the summer, a series of natural disasters in Asia took out some more glass capacity. By the end of September, panel production was out-pacing softening demand, and panel prices started to fall. It was expected that glass substrate supply would be plentiful through the end of the year as capacity utilization in Taiwan was brought down slightly.
Panel makers did reduce production in October and November, but a glass shortage has emerged nonetheless, again specifically in Taiwan, and particularly for Gen 6 and larger.
There are a few reasons a glass shortage has emerged again:
- Taiwanese panel makers are increasing utilization rates of Gen 6 and Gen 7 fabs in response to TV panel demand, which continues to be strong.
- Some glass substrate makers are still not fully running all of their tanks.
- Korean fabs are mostly at full utilization currently, so there is no spare glass substrate capacity from Korea to support Taiwanese panel makers.
It is expected that the merger of CMO and InnoLux will result in changes in the glass substrate procurement; this expectation is making glass suppliers cautious about changing allocation to their customers right now.
Monitor and notebook panel prices are expected to increase in Q1′10, and some panel makers are talking about increasing the TV panel prices in response to strong demand. Will a glass substrate shortage lead TFT LCD panels into a shortage cycle? Or is this shortage just a short-term phenomenon as panel makers rush to increase capacity utilization? Furthermore, will the glass shortage lead to slower cost reduction by panel makers? If TFT LCD cost reductions slow, will we see the stronger demand expected to be triggered by reduced end-market prices in 2010? DisplaySearch has indicated that 2010 will be a good year for TFT LCD panel makers, but it seems like sunny days are coming earlier for glass substrate makers than for panel manufacturers.
Email
| 
Print
| from → Authors (post by authors), Equipment and Materials, Shawn Lee
So is this a carefully planned scenario foisted by the glass producers or just an accedental set of unusual circumstances. Glass has remained quite tight throughout much of the 2nd half of 2009 as glass production was below demand. Did the glass manufacturers underestimate how quickly they needed to bring back capacity, or did they intentionally keep production levels low?
From Q2′09, glass makers have been re-ramped most of tanks that were shut down before; but it needs 2 months at least to make the tanks restoring. This impacted the supply and quality of glass substrates until now. Originally glass makers want to fine-tune the tanks in the end of Q4′09 to fulfill reqursts in 2010. But panel makers all keep Gen6 above LCD fabs are full loading now, which affects that glass makers can not solve the quality issues, and supply is tight again. Glass makers will speed up fine-tune and re-ramp up tanks to fulfill panel makers’ requests, glass makers expect all of issues will be solved before Q1′10.
It is tough time for panel makers to buy glass substrates now. Tier one panel makers like to raise loading rate, but glass makers have quality issues which imapct the supply of glass substrates, including NEG and Corning; the supply is very tight now. The quality issues will be solved after middle of January in next year, panel makers are eager to have glass substrates now. The supply/demand of glass substrates is almost 0% now.