Sharp`s stop of LCD line operation increases possibility of restructuring in LC

Sharp, Japan’s leading LCD panel maker, decided to stop the operation of its several LCD panel manufacturing lines in Japan as it cannot sustain more in the worsening LCD panel market. It is the first time for the world’s 5th largest LCD panel maker to stop its operation.

Taiwanese panel makers like AUO, CMO and CPT already hit the bottom in the operation rate as well as the performance.

As Sharp also turns off its operation process, the restructuring in the world’s LCD panel market is likely to be accelerated in the next year.

On December 14, international media outlets including the Nihon Geijai Newspaper said that Sharp decided to stop its 2 LCD panel manufacturing lines until March and dismiss 300 contract workers.

These lines which will be stopped have been manufacturing small and mid size panels since the end of the 1990s. These lines have been known to show lower productivity.

Also, IPS Alpha Technology, an LCD panel affiliate of Panasonic, also decided to cut its output from this month to January in the next year.

Taiwanese LCD panel makers also stopped the operation of several lines as their outputs reduced.

Display Bank, a market researcher, said that AUO and CMO have stopped a 5G LCD panel manufacturing line each. CPT also stopped one of its two 4G lines.

As the operation rate of Taiwanese panel makers cut down, the gap between Taiwanese makers and Korean makers is growing. Display Search said that the market share of Taiwan LCD makers has reduced from 47.5% to 43.5% in a year.

But, the market share of Samsung and LG increased from 39.7% to 43.8% during the same period. In the fourth quarter, the share of Taiwan is predicted to fall down further to 42.7% while Korea grows to 44.5%, expanding the gap between them.

Excluding Samsung and LG Display in better conditions, other panel makers around the world are now in the survival game.

If the dramatic fall of the operation rate leads to the stop of the operation, the impact is likely to remain for a while.

Therefore, the difficulties of panel makers in Taiwan and Japan are not likely to be resolved soon.

Usually, the reoperation takes at least two months. In the case of Taiwanese makers, the Taiwanese government is predicted to come up with drastic measures like the merger or the financial support in a condition of restructuring.

Lee Je-hyuk, director of Display Bank, said, “Sharp’s stop of operation in its small and mid-size panel lines is a symbolic development in the industry.

But, this development is likely to lead to the threat to the Taiwanese panel makers. Their operation rates will be worse than expected.”

Industry insiders also predict that the stop of operation in Korean LCD makers. But, in terms of degree, theirs are not as serious as Taiwanese counterparts.

An official of LG Display said, “We are trying to have 10 days off at manufacturing lines to have a realistic effect to cut the output.

But, it is only for controlling the output, considering the leading position of the Korean makers.”