Frost: Increasing Popularity Boosts LCD Manufacturing Equipment Markets
September 17, 2007 // Published as a news service by IHS
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The improved high-definition (HD) viewing experience and greater viewing area provided by liquid crystal display (LCD) televisions increase demand and subsequently drive the growth of the LCD manufacturing equipment market, according to Frost & Sullivan.
In addition, decreased panel prices have made LCD TVs more affordable, which will likely lead to significant growth in the LCD TV market.
Recent analysis from Frost & Sullivan of the LCD manufacturing equipment markets found earned revenues of $1.50 billion in 2006, with estimates to reach $2.30 billion in 2013.
"The increasing preference for a larger viewing area drives the need for LCD equipment capable of handling larger glass substrates," said Frost & Sullivan research analyst Deepa Mathew.
"The impact of this driver is expected to remain high in the short and long terms as LCD TVs make greater headway into markets traditionally dominated by CRTs [cathode-ray tube]."
To meet the demand for flat panels in various applications, assemblers are ramping up production by increasing the capacities of existing facilities and investing in new generation fabrication facilities.
Analysts said 2006 saw increased adoption of Generation 6 equipment, as well as the establishment of Generation 7 fabrication facilities.
Despite the increase in panel sizes, analysts said sales of older generation equipment will not come to a standstill as desktop monitors, cell phones and other electronics utilize smaller display sizes. Countries such as China will continue to see investment in older generation equipment as they manufacture large volumes of small-sized displays.
New fabrication facilities and the installation of next-generation equipment entail considerable costs. Given these costs, LCD panel manufacturers are understandably cautious about committing to such a massive investment.
Analysts said the market's fierce competition leads to extreme price pressures, further compounded by the fall in glass substrates' prices. In order for equipment vendors to maintain profitability, they must manage cost structures and find new ways to control costs.
"Cost structures can be effectively managed by adopting improved process flow across the assembly floor and designing machines with greater productivity and throughput," said Mathew. "Associating and forming strategic partnerships with other market participants and customers that can complement their product line or help penetrate newer markets could also help in lowering risks."
Source: Frost & Sullivan.