The supply of anisotropic conductive film (ACF) for the production of flat panels is likely to be affected by the earthquake that hit Japan on March 11, but with a month of inventory, AU Optronics (AUO) expects no short term supply issues as long as Japan-based suppliers regain normal production as soon as possible, according to Paul Peng, executive vice president of AUO.
Japan-based makers account for 70% of the global ACF supply, Peng added, saying that Japan-based makers tried to resume production on March 15, but were affected by rolling black-outs. Panel prices are expected to start rising in the second quarter of 2011.
With transportation and communication not fully recovered, the supply of upstream materials remains unclear, and the overall effects on the panel industry in the second quarter of 2011 is also uncertain, Peng indicated.
Peng noted that affects to the Labor Day holiday in May in China remain unclear, but current TV inventory level is healthy and it is not seeing signs of vendors stocking up inventory. Market sources added that panel demand and prices will remain at the bottom in the first quarter of 2011, but with the risk of material supply and panel inventory shortages rising, it may generate early replenishment demand from downstream clients.
| Japan earthquake effects to the LCD panel industry |
| | Product | Issue | Substitute | Effects to the industry |
| Upstream materials and components | Glass substrate | Corning and Asahi Glass are major suppliers, production of melting tanks may be affected by rolling black-outs | Limited substitutes as vendors dominate the market | Medium |
| Color filter | Toppan and DNP are major suppliers, currently seeing minimal effects | Highly replaceable with high in-house production rates at panel makers | Low |
| Polarizer | No significant effects to major suppliers such as Nitto Denko | Many Taiwan-based players have entered the production of polarizers such as BenQ Materials | Low |
| ACF | Hitachi dominates the market and is not having issues with supply | Limited substitutes | High |
| Equipment | Photolithography exposure machine | Nikon and Canon are major suppliers and both are located in affected areas | Limited substitutes | High |
Source: Companies, compiled by Digitimes, March 2011