The industry that makes large flat-panel displays for television is consolidating. Staying competitive requires huge resources for technology, process development and constructing modern fabs; and it requires high volume for minimal manufacturing cost and for the clout to beat material and component suppliers into submission. The only question is how many suppliers will be big enough to survive.

Ken Werner
Senior Analyst and Editor

On the PDP side, there have only been five manufacturers of TV-use displays since CPT and Formosa Display threw in the towel in 2006, and CPT and Formosa never succeeded in becoming more than marginal players. Now, the top three manufacturers - Matsushita, LG Electronics, and Samsung SDI - have 89% of the market, according to the edition of Displaybank’s PDP Market Shipment Trends published this March. As recently as January, that share was "only" 87%, but in the relatively weak market for PDP panels experienced recently, it’s the 800-pound gorillas that take bananas - that is, market share.

Pioneer, the smallest of the five players, is losing share while FHP (Fujitsu Hitachi Plasma Display, Ltd.) seems to be holding its own. LGE, one of the big three, is also losing share, but still has a much larger share than FHP. Pioneer’s reputation for superior image quality (and high prices) is not likely to trump its excessively low volume. As my colleague Pete Putman speculated in a previous Display Daily, Pioneer may be worth more as a brand for a Chinese company than as a functioning manufacturer of plasma TVs.

On the LCD side, Samsung Electronics has set itself a stunning market-share goal of 59% for LCD panels larger than 40 inches, and has connected that goal with the ramp-up of its Gen 8 production line in the second half of this year. "We will secure 59% of the world’s LCD production capacity this year," a Sony official said. Currently, Samsung supplies 30-40% of large LCD panels world-wide, and its aggressive goal far exceeds Display Search’s projection of 48.8%. If Samsung pulls this off, it would be insulting to call the company only an 800-pound gorilla.

The next-largest manufacturers are LG.Philips LCD (Korea), AUO (Taiwan) and CMO (Taiwan), although CMO is still a larger producer of large TV panels than AUO. AUO is currently digesting Quanta Display, which it acquired last year. It’s hard to place Sharp on this scale, since it primarily supplies its own internal panel needs. And let’s not forget S-LCD, the Sony/Samsung manufacturing joint venture.

The remaining makers of large LCDs in Taiwan are Chunghwa Picture Tubes (CPT) and HannStar. Although these companies have proven themselves to be nimble competitors, will there be enough volume for them if Samsung succeeds in selling 3 of every 5 large LCDs bought in the world, and LG.Philips LCD, AUO, CMO, Sharp and S-LCD then pick up their shares?

For large-screen TV panels, it is not hard to envision a world with two or three PDP suppliers and five or six LCD suppliers - at least until mainland China learns how to make large fabs to supply its domestic TV industry.