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Large-Sized TFT-LCD Industry Report, 2006

Published: August/2006

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17-inch TFT-LCD Panel Cost Structure (5G Line)



The labor cost only accounts for 6% of the total cost, while the cost of raw materials accounts for 70%. To reduce the cost of 17-Inch TFT-LCD panel production, the key is to reduce the cost of raw materials. This is the reason why TFT-LCD panel manufacturers must have perfect the supply chain.

32-inch LCD-TV Panel Cost Structure (6G Line)


 

The raw materials cost of 32-inch LCD-TV accounts even higher of 79% of the total cost. TFT-LCD industry is an upstream-dominant industry. On the one hand, only a few manufacturers exist in the upstream market, less than 10 manufacturers in each field of color filter, glass substrate, driver IC, backlight unit, polarized panel and liquid crystal. Moreover, Top 5 in each filed are having about 70% to 100% market shares. On the other hand, the photoresist for color filter, CCFL lamp for BLU and TAC for polarized panel, are monopolized by less than five manufacturers. Therefore, this report mainly focuses on the upstream domain.

Operational Performance of Global Top 8 Large-Sized TFT-LCD Manufacturers, Q1 2006

 

Samsung

LCD

LG

Philips

AUO

CMO

CPT

QDI

Hannstar

BOE

Revenue

(RMB Billion)

23.4

21.5

15.8

11.3

5.8

4.9

3.9

2.4

Net Profit

(RMB Billion)

0.95

0.45

1.88

1.7

0.01

-0.04

0.11

-0.57

Net Operating Margin

4%

2%

12%

15.4%

0.1%

-0.09%

2.7%

-24%

 
Although the revenues of AUO and CMO were far behind of Samsung and LG Philips, CMO and AUO's gross margin was 7 and 6 times more than that of LG Philips respectively. Nevertheless, almost all secondary-line manufacturers suffered a loss.
 
The high gross profit was mainly resulted from the good layout on raw materials, but not relying on low labor cost. Except for glass, AUO and CMO can produce all other upstream raw materials. Considering the cost of raw materials accounting for more than 70% of the total cost of LCD panel, manufacturers in Taiwan naturally make more profits than Samsung and LG Philips. Take AUO as an example, the Wellypower, affiliated with AUO, can provide CCFL lamps; the Daxon which was invested by AUO, can produce polarized panel. Moreover, AUO can self-provide color filters, the Corning, locating in the same industrial park with AUO, can provide glass substrate, the Novatek, also affiliated with AUO, is the largest TFT-LCD Driver IC manufacturer in the world.
 
Compared to AUO and CMO, secondary manufacturers suffer great loss. BOE has a huge deficit of RMB 570 million, and its revenue is the least. SVA Group also suffers a lot. BOE takes 17-inch TFT-LCD panel as its knockout product, while SVA NEC regards 15-inch TFT-LCD panel as its leading product. Nevertheless, the market development of 15-inch TFT-LCD panel is quite limited, only having thin profit margin.
 
 

 

Glass Substrate

Backlight Unit (BLU)

Color Filter

Driver IC

Polarized Panel

SVA NEC

NEG

 

CCFL: Stanley

Module: Stanley

Taiwan Sinteck

NEC

Nitto Denko

BOE

Corning

Module: Korea NANO HITEC KONTERO, SNL, STS, SHY

 Taiwan Sinteck, Japanese DNP

OKI

LG Chem

CMO

AGC, Corning

Chilin(Subsidiary of CMO)

Self-Manufactured

Himax(Subsidiary of CMO)

Self-Manufactured

AUO

NEG,Corning

CCFL:Wellypower

Cando

Novatek

Daxon

 
 
Except for glass substrate, Taiwan manufacturers can produce other raw materials by themselves, whose quality is better than original auxiliary components made by Korean manufacturers. Manufacturers can hold purchase right under the condition of mastering the core technology of TFT-LCD panel, as technical engineers finally decide the purchase of raw materials. As long as manufacturers reserve purchase right, they are able to compete in the upstream market. The technology of BOE comes from Hydis, while SVA's technology is from NEC. It is well-known that NEC has already completely withdrawn from LCD market. Therefore BOE's technology is stronger than that of SVA. The most important process for producing TFT-LCD panel is Array, similar with the process of wafer fabrication. What differs is that wafer is put on silicon chip while TFT-LCD on glass substrate. Taiwan manufacturers have rich experience in producing wafer as well as manufacturers in Korea and Japan. But mainland manufacturers pretty lack of experience in manufacturing wafer.
 
Additionally, establishing industry chain is not simply attracting manufacturers to move into its own industrial park. What the most important is that manufacturers must master its own technology and productivity, and then have power to occupy upstream market. Like AUO in Taiwan, it is the parent company of Daxon and Cando, big shareholder of Wellypower as well as an affiliated company of Novatek. Whereas, even if BOE or SVA NEC attracts overseas providers to move into China, these overseas providers will still transfer their profits to overseas markets. Since price given to BOE or SVA NEC won't be lower at all, the possibility of loss exists.
 
Manufacturers couldn't make huge profits unless they completely master technology and production capability, but it needs a long course and huge financial support.


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