Review of China's Large-Sized TFT-LCD Panel Market in 2008 and Outlook for 2009

CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released its report on China's large-sized TFT-LCD panel market.

Affected by the global financial crisis, consumer demand remained sluggish in 2008. As a major producer of IT products, China has also been greatly affected in the crisis. A sharp drop in the output growth of terminal products such as notebooks, LCD TVs and LCD monitors resulted in a big fall in the growth rate of the large-sized TFT-LCD panel market. In 2008, sales volume of large-sized TFT-LCD panels reached 215 million in China, up 20.7% over 2007, which was lower than the 30.1% growth rate in 2007.

Fig. 1: Demand and Growth Rate of China's Large-Sized TFT-LCD Panel Market, 2005-2008
Source: CCID Consulting, December 2008

The market was in a situation of even performance throughout the year. In 2007,thanks to a strong demand in the terminal market, there was undersupply in the LCD panel market, while panel prices rose all along. Some panel vendors also expanded their production capacities in succession. Entering 2008, as whole machine vendors were optimistic about the terminal market, they started to increase their inventory and panel demand continued to be strong, leading to a situation of strong growth in the off-peak season. However, after June, the global financial crisis originating from the sub-prime crisis in the United States worsened. Consumer demand was seriously suppressed, while the demand for panels also fell significantly. LCD panel price even approached cost price at one time. Several major panel makers in the world reduced their production capacities to cope with the crisis.

Almost all market shares were concentrated in 3 major fields. Large-sized TFT-LCD panels are applied to 3 major products: notebook, LCD monitor and LCD TV. In 2008, 210 million panels were sold in these 3 fields in China, accounting for 98.1% of all the large-sized panel sales volumes. Other applications were mainly concentrated in the digital photo frame and other emerging products, but the market shares for those remained small.

Fig. 2: Large-Sized TFT-LCD Panel Application Structure in China in 2008
Source: CCID Consulting, December 2008

Wide-screen panels gradually became the mainstream. In 2008, the TFT-LCD panel product structure continued to tilt to wide-screens. This change was mainly a result of consumers' demand for more multimedia entertainment functions, because wide-screens are better for the representation of multimedia effects. Wide-screen panels were rather popular in the market. Panel vendors have shifted their production capacity to panels for wide-screen monitors and wide-screen notebooks, resulting in a significant increase in product lines.

The top 5 panel vendors made up the main market. The panel industry is a fund- and technology-intensive industry, with high entry thresholds. The industry is relatively highly monopolized. The world's top 5 panel vendors, namely Samsung, LGD, AUO, Chi Mei and Chunghwa Picture Tubes basically occupied absolutely most shares of the large-sized TFT-LCD panel market. As far as the current industry development trend is concerned, the situation where key vendors control the market will not be changed much in the short term.

The impact of the financial crisis of the later 2008 on the consumer market has gradually appeared. This impact will not disappear in the short term. As a result, China's large-sized TFT-LCD panel market in 2009 will basically maintain a situation of balance between supply and demand, and its growth will slow down further. As for application structure, the 3 major fields of LCD TV, notebook and LCD monitor will continue to make up almost all the market shares. In terms of product structure, large-sized and wide-screen panels will continue to be the development trend. In addition, the top 5 panel vendors in the world will continue to take up most of the market.