TrendForce：Taiwan-Based SI Makers Must Find New Silk Road

According to the shipment survey by WitsView, the display research division of the global market intelligence provider TrendForce, Taiwanese LCD TV SI makers’ Q2 shipment grew 12% from the previous quarter to 8.35 million units. The shipment forecast for the entire 2013 is revised down to 36-38 million units (figure.1), showing no growth or even a decline from the 2012 shipment of 37.8 million units, and the market share projection is down to 18% for 2013 from 22.1% for 2011, and this is the second consecutive annual decline for Taiwanese LCD TV SI makers.

Besides, the LCD monitor SI industry sees shipment drops for three consecutive years, and the global monitor shipment for this year, of which Taiwanese SI makers control 65%, is projected to slide to 140-141 million units, dropping 9% YoY. As for the NB ODM business, Taiwan accounts for as much as 95%-98% of the global shipment, which is estimated at around 168 million units for this year, declining 10% from last year and seeing declines for two consecutive years.
   
WitsView research director Burrell Liu indicates the reasons for the consecutive declines in Taiwan’s LCD TV SI industry: 1. Sluggish macro economy leads to decreasing market demands, and the 2013 global LCD TV shipment may stay flat as that for 2012 or is lower than last year’s 206.5 million units, showing the first historical drop; 2. China’s TV subsidy policy ends and the advance consumption in the first half of the year would damp that in the second half; 3. Taiwan is excessively depended on Japanese clients, seeing an imbalanced structure; 4. In lack of their own brands’ outlets, Taiwanese makers are easily influenced by the market fluctuations; 5. Brands and retail channels are busy with their business in the low-profit era, pressing revenue and survival room for SI makers.

WitsView indicates the outlook for LCD TV SI makers is actually very dim, and SI makers are struggling. In view of the developments in the TV industry, the emergence of Chinese brands and SI makers are realized with the help of official subsidy policies that drive up domestic demands and make up the losses in export orders, while Taiwanese makers are losing edges in the reshuffle. Hon-Hai aggressively deploys the business” eight displays and one cloud”, integrates its panel business, and allies with LETV and telecom companies, which shows making breakthroughs in the industry is inevitable, no matter how the result is.
  
Another example is that Briview has combined AUO’s advantages on panels and builds the new BMS business, broadening its own way, while the sales are weak for its peers. Japan’s FUNAI not only cultivates in PHILIPS’ TV selling business in North America, holding the exclusive dealership license, but works with the retailer Walmart to maintain the stably surging growth and market share. TPV, emerging from the passing CRT era, successfully secures its position as a SI leader in the industry in the micro-profit era on its precise transformation and the strategic partnership with PHILIPS’ monitor and TV brands.
    
WitsView believes that the prosperity in Taiwan’s electronics and technology ODM industry has already waned, and the industrial transformation examples in Japan, Korean, Europe, and the U.S. are worth rethinking. The government officials should strongly support the industrial adjustments, integrate resources, and boosts the competitiveness in the country’s electronics industry.
   
Table 1: 2013 Taiwan LCD TV SI Shipment (sell-in)