WitsView: light guide plate materials will be the key strategic materials for the development of LED TV this year
LED TV is certainly a priority in the product development of TV brand vendors and panel makers this year. In order to achieve exponential growth in LED TV shipments, makers are aggressively seeking a stable source of LED chips, focusing mainly on the procurement and restocking of LEDs and light bars. However, the supply of light guide plate (LGP) and raw material PMMA, which had been overlooked, may possibly cause the most serious material shortage in the production of LED TV this year.
Polymethyl Methacrylate (PMMA), the raw material for light guide plate, is available in two forms: plate and resin. Generally speaking, the former is mainly applied to LGP of larger sized monitors and TVs, produced through the cutting process; while the latter is applied to LGP of notebooks which have higher requirement for thickness, produced through the injection molding process.
According to WitsView, demand for PMMA was almost equal to demand for notebook and monitor panels in the past; Because of stable demand of the IT market, for a long time, suppliers of PMMA raw materials have been more conservative toward capacity expansion. However, since last year, edge-type LED TV has been successfully established as the mainstream product. Due to the different optical design, light guide plate is used to replace diffuser plate in the backlight module. Furthermore, the average size of TVs is much larger than that of IT products; therefore, due to the substantial increase in PMMA usage, supply of PMMA naturally shifted from oversupply to tight supply, and a shortage may even occur in future.
Eric Chiou, WitsView’s research manager, noted that the tight supply of PMMA will occur around 2H10. Although various attempts have been made to use other possible alternative materials to produce LGP, however, in the short term, these alternative materials are unable to meet the requirements in terms of transmissivity and cost.
Regarding the part of the supply chain which will be most heavily impacted by the supply gap of PMMA, Chiou indicated that, leading brand vendors Samsung and LG had developed their products earlier, hence, as they discovered the possible shortage in PMMA, they were the first to sign the supply contracts with suppliers in Japan, Taiwan, Korea, and China; as a result, their source of material supply is relatively more stable. For Taiwan panel makers AUO and Chimei Innolux, their respective sister companies Forhouse and Chimei Corp. are ranked among the world's top three suppliers of PMMA plates; hence, with the internal support from the group, the impact from PMMA supply gap will be relatively more limited.
On the other hand, China’s domestic brand vendors, which positioned the LED TV market as their key competing segment, have made substantial effort in the control and restocking of LEDs. However, as these brand vendors are at the end of the supply chain, their relationship with upstream PMMA suppliers is not as close as that of backlight module makers and panel makers; therefore, they have relatively weaker control of material supply. Once PMMA supply gap leads to issues of LGP supply, these brand vendors will inevitably be forced to suspend its plan of assembling LED TV panels, and they will have to purchase LED TV panel modules from other sources.
According to WitsView’s observation, for brand vendors such as Samsung and Sharp, their volume of LED TV panels available to the merchant market is already very limited. If the supply of panels is further compounded by the aforementioned shortage of PMMA plate and LGP, the quantity of LED panels available on the market becomes highly limited. Under these circumstances, not only will LED TV panels face issues of short supply, it will in turn support the price of panels; therefore, the decline in the set cost of LED TV would be less than anticipated. In light of the above, both the supply and cost of panels are significantly negative variables to the optimistic penetration rate of LED TV.
