TrendForce: LTPS Production Capacity Expected to Expand, Competition in Small-Size Mobile Phone Panel Market to Intensify in 2015

The major panel display manufacturers will continuously add low-temperature polysilicon (LTPS) production lines from 2015 to 2016, focusing on the Generation 5.5 and Generation 6 lines, according to WitsView, a research division of TrendForce. “Total production capacity by area will more than double from 5.8 million square meters in 2013 to 11.7 million square meters in 2016,” said Boyce Fan, Senior Research Manager at WitsView. 

Demand for small and medium-sized handsets is resilient and vendors are increasingly packing more advanced features into mobile phones. As a result, manufacturers with LTPS production capabilities have an opportunity to enter the medium and high-end handset markets. The LTPS sector is also attracting increasing investment which will help further develop the medium and high-end mobile phone markets. 

The entry barrier is high for LTPS production and manufacturers have to spend considerable time increasing the yield rate, Fan said. When LTPS goes to mass production, achieving a high yield rate is contingent upon the manufacturer’s skill level. It usually requires six to nine months to increase the yield rate, which may cause delays in getting the product to market. “Competition has been fierce in the small-sized mobile phone panel market this year,” Fan said. “The emphasis has been on high cost-performance (CP) ratio and that has started to squeeze the operating margins of small-sized panel manufacturers. The operating margins of manufacturers late adding LTPS production lines will face considerable pressure.” 

Among current mid and high-end mobile phone panel suppliers, the Japanese firm Japan Display Inc. (JDI) still has a 30 percent share of global LTPS production capacity. Besides providing stable LTPS supply to Apple, it must seek new avenues to digest its large production. JDI mobile phone panels have a technological edge over their competitors and utilize the distribution channels of Taiwan Display Inc. (TDI). Together, those competitive advantages have helped JDI gain a foothold in the China market in recent years. But competition in China’s mobile phone market is so intense that JDI needs to also use a low-pricing strategy to stay ahead of its competitors. 

The South Korean supplier Samsung Display will have to start selling its AMOLED panels previously used only in Samsung handsets to other manufacturers in 2015 as the market for high-end Samsung mobile phones cools. At the same time, with the amorphous silicon production process improving, some panel manufacturers have started to try to produce a panel with a resolution higher than ppi 400. This type of panel is known as an a-Si Full-HD. With JDI actively lowering prices, WitsView forecasts that there will be intense competition in the small-sized mobile phone panel market. It will be a challenge for HD panels to remain profitable while FHD panel margins will also be squeezed significantly.