LCD glass substrate demand increases 26% in 2Q09, says DisplaySearch

Source: DisplaySearch, compiled by Digitimes, July 2009

Source: DisplaySearch, compiled by Digitimes, July 2009

Global LCD glass substrate demand increased to 18.56 million square meter per month in the second quarter, up 26% sequentially and much higher than the glass supply growth of 12% from the first quarter to the second quarter of 2009, according to DisplaySearch. This has created a tight supply situation and led TFT LCD makers to call for increased allocations from their glass sources for the second half of the year.

In the second quarter, the glass glut ratio (oversupply amount) is 0.6%, which is far below DisplaySearch's definition of balance point of 5-10% glut. Assuming glass companies continue to bring more capacity on line in the third quarter, supply is expected to grow at 8% sequentially; however, the glut ratio is still forecast to be below the balance point.

DisplaySearch estimates that glass tightness in the second quarter will continue in the third quarter as LCD panel makers are increasing capacity utilization and demanding more glass substrate from suppliers, but glass supply demand will reach a balance in the fourth quarter.

"The glass supply-demand balance in Taiwan has been different from Korea or Japan," according to Tadashi Uno, director of materials and components market research at DisplaySearch. "The economic crisis that hit in October 2008 impacted Taiwanese panel makers the most, due to currency differences and customer relationships. In the fourth quarter of 2008 and the first quarter of 2009, panel makers consumed glass inventory and reduced glass orders, especially Taiwanese panel makers, so glass makers stopped tanks to avoid losing money."

Uno continued, "Starting in the second quarter, panel makers began rapidly ramping up production, and are placing full capacity orders to glass makers. However, it takes 1-2 months to bring a stopped tank back to mass production, leading to glass substrate tightness."

The consolidated global market share of Corning and SCP (Samsung Corning Precision) was 52% in the first quarter of 2009, down from 55% in the fourth quarter of 2008. The three main Japanese glass substrate suppliers all gained share. AGC (Asahi Glass) had 23% share, up from 22% in the fourth quarter of 2008; NEG had 19%, up from 18% in the first quarter of 2009; and AvanStrate's share also increased, from 5% in the fourth quarter of 2008 and 6% in the first quarter of 2009.