Everyone agrees that the Chinese TV market is very important for the display industry. It is not only an expanding manufacturing center but represents a huge growth market that can absorb all the new TV technologies. And, with the 2008 Olympics coming to Beijing, a surge in demand is expected for HDTVs to showcase the Chinese infrastructure to the world. All this sounds like an environment for investment and growth of new TV technologies, but in fact, the recent news suggests some differences of opinion on the future direction of the Chinese display industry.

Chris Chinnock
Senior Analyst and Editor
for Insight Media

For example, Yan, Xiaolin, CTO of Components SBU & General Manager of Technology Center, TCL was quoted the other day as saying that the overall Chinese TV market will rise in coming years, but don’t expect LCD-TVs to become a mainstream product until at least 2010.

In figures he supplied on the Chinese TV market, as shown in the table below, note that CRT-TVs still dominate sales in 2006. He forecasts Chinese TV sales to rise to 45.6M units by 2010, but he did not specify the breakdown by technology, so I am unclear of his definition of "mainstream." Mr. Yan also called 32" LCD-TVs mainstream now in China, but again, I don’t know what this means.

Sales of LCD-TVs grew rapidly in 2006, but sales of PDP-TVs grew only 6% because of competition with 40-inch LCD-TVs, and sales of RPTVs declined significantly.

But if the growth of the LCD-TV industry is to materialize in the larger screen sizes, as is forecast for most of the rest of the world, China has a problem. According to Mr. Yan, TCL, Changhong Electric, Konka, Hisense and Skyworth together claim around 85% of the China TV market. But according to Displaybank, Chinese makers are only capturing 60% of the domestic market for LCD-TVs, and most of these LCD panels come from overseas suppliers.

But to compete effectively in these larger screen sizes, China will need 7G and later fabs to offer cost-effective panels to fuel the growth. The problem is, China has no LCD fabs beyond 5G today.

So you would think Chinese TV makers would be very interested in building up local LCD fab capacity, especially in later generation fabs in order to compete effectively in larger screen sizes. Therefore, one might conclude that Chinese TV makers need to build these later generation fabs if they hope to meet the needs of the domestic market. But timing is an issue too, as the pace of Chinese LCD-TV adoption would seem slower than most would have thought, judging by Mr. Yan’s comments.

Currently, there seem to be discussions about building 5G and 6G lines in China, but there are also rumors of consolidation among China’s current LCD fabs. Meanwhile, Tier 1 LCD makers are talking about 8G, 9G and10G fab investments, so China will remain behind the competitive eight ball for larger-sized panels.

Displaybank concludes that Chinese LCD TV makers will strive to achieve more vertical integration and should invest in 6G fabs. TCL’s Mr. Yan agrees that increasing panel supply is needed for TV makers to increase their share.

But, perhaps as an indicator of the maturing nature of flat-panel TV manufacturing, Mr. Yan states that there is now limited room for further improvements in flat-panel TVs manufacture as most of the technical know-how has already incorporated in the TVs. He says that circuit boards, image processing ICs and backlight units (BLU) are all pre-installed inside TVs, so China-based TV vendors have to standardize their products and dedicate more efforts on brand management. Brand management - interesting.

I hope to learn much more about the China TV market and its manufacturing competitiveness at the upcoming Display Summit - China, being held in Beijing on April 24. Among the speakers will be Kenny Kim, Vice President at DisplayBank, who will talk about " The Supply Side Picture of Flat Panel Displays and its Impact On China." Ben Leet, Sr. Analyst at Decision Tree Consulting, will follow with a talk on, "The Global Picture - Is China Really So Different?" Maybe you should attend this event - and go to the Integrated Systems China Exhibition the next day. For more: www.displaysummit.com.