It’s been a painful time for an optimistic journalist. Finding the silver lining in doom and gloom stories is sometimes no easy task. While one is often tempted to skip the first "R" (recession) and look for the lessons in healthy companies among a stricken display industry, a review of today’s headlines has that second "R" word (recovery) showing up more frequently.
Senior Analyst and Editor
Here’s a quick sampling from some recent headlines:
· Reuters: Samsung SDI Post Q1 Op Loss But Sees Q2 Recovery
· WSJ: Corning Hires Laid-Off Staff Amid Signs of Recovery
· Nikkei: Recovery Signs Emerge In Korea as Won Weakens
· Nikkei.net: Battered Sharp Bets on LCD Biz for Recovery
It’s a subtle difference but just adding that simple "Recovery" to the headline makes a world of difference in reader perception. And beyond simple optimism, we believe there is reason to believe we are moving the right way again.
To get a read on the LCD industry perspective from a local "insider" we had a brief e-mail exchange today with Gary Feather, VP consumer systems and technology, Sharp Labs. While Feather was quick to note he is not a Sharp spokesperson, his view of the industry is pretty broad from up on his hill at Sharp Labs in Camas, Washington.
Feather notes that despite declines in Q4-08 and Q1-09, flat panel sales continue to grow. He cites key numbers from DisplayBank (and DisplaySearch) forecasting 120M to130M panels for LCD TVs this year, with LCD continuing to dominate the FPD space (200M of the 240M units forecast to ship by 2015).
In the Nikkei Sharp headline above, the uptake of the story was that with Sharp’s state of the art Gen10 fab (Sakai Prefecture) coming on line later this year, the company is looking for better yields in higher margin display sizes to help boost profits in 2009. Feather agrees, but also points to higher utilization as critical for success. "Utilization of fabs (at an industry level) is on the rise with industry analysts seeing us in the 85% range as an industry by end of Q2-09."
Nikkei said Sharp also plan to leverage the efficiencies in larger panel production to push its market share beyond mainstream sizes (currently at 32- and 37-inch) focusing on the more profitable +40-inch size category. Current mainstream LCD-TVs lost 31% to 38% ASPs in the last quarter alone. Sharp’s gen10 plant will vastly improve efficiencies in 40- 42- and 60-inch LCD panel production, giving the company an edge in the market.
And as Feather notes, there are already signs of recovery in the LCD space. He cited the Corning "Recovery" story in WSJ today (see headline above) noting that the company makes 90% of its profit from its LCD business. "Corning is rehiring workers as they are a specialty glass producer focused on the best LCD fabs in the world," (including Sharp), said Feather.
Feather mentions other rays of hope in the display industry that give pause are:
· Power reduction (while still maintaining application performance requirements)
· IP service connected FPD that offer new and useful approaches to content including Widgets from Yahoo and movies from Netflix, Amazon and Blockbuster et al. all streaming to the FP TV
· Digital Cable (tru2way) plus the "peaceful co-existence of LCD (with 85% market share) and PDP
· New market segments like enterprise (conference rooms et al. replacing projection), Digital Signage, etc.
· The "truly ubiquitous network society" requires more and larger displays for yet unnamed markets…
So fear not, the shadows of the first "R" (recession) and talk of doom and gloom, for as surely as the sun rises, the second "R" (recovery) is on its way. Feather concluded our exchange with these words: "We in the display business are blessed to have so many opportunities ahead of us as a display industry with a firm foundation already established." Thanks Gary, and Amen. - Steve Sechrist
Note: for an extended version of this story, please see the upcoming May issue of Large Display Report.