The next session was on the financial Implications of the display industry and the first speaker was Paul Gagnon of IHS, again.
The display market has grown to around 4 billion units, the revenues are around $130 billion and the total display area production is around 200 million square metres. Average price has been going up, but ASP per inch is declining.
The mobile application accounts for the largest number of displays, but TVs drive revenues and area. The drive to high resolutions for mobile applications helped to drive ASPs up for a while, but that has changed now. Large panels are more stable. Overall the industry has cycled between profits and losses.
Over the last couple of years, the industry has, just about, been in profit on a net profit basis. Panel-making remains profitable, but the profit is expected to decline. That is because demand is not quite so good and that could mean problems for panel pricing. Growth is looking weak for the second half of this year, in TV.
Displays have a huge impact on the BOM cost of sets, and especially TVs. For example, in TV, the display is around 68% of the BOM cost of the complete set, whereas in a 5.1″ smartphone, the display is only around 27% or 28%. On the other hand, the retail and brand margin (combined) is around 50% for TVs, while it’s around 70% for mobile sets.
Chinese and Korean TV makers have been the most profitable over recent years and the Chinese have got even more profitable recently. This has been helped by vertical integration and the Chinese market demand for new features. The Japanese makers have not been so integrated and have struggled, and some have effectively given up the business outside Japan and moved to a licensing model. Finally, after 10 years and a lot of re-structuring, Sony has started to get back to a profit.
Gagnon said that set makers should focus on the innovations that consumers really understand and value. Resolution is one of those areas. Are we reaching a pixel density limit in mobile, he asked?
Better color can be used to capture more value and HDR is also an opportunity, if standards can be adopted.
Improving display efficiency is an opportunity in mobile applications as battery life continues to be a problem. Gagnon thinks consumers would spend more if they knew battery life would be longer.
