***DisplaySearch US FPD 2005
By John Latta
San Diego, CA
March 1 – 3, 2005
DisplaySearch continues to lead in its ability to assess the
display market. The company is heading for 28 employees who are
located in 6 countries. The strategy is to understand the
complete flat panel display food chain from the fabrication
equipment to retailers. This is a major task and one which
DisplaySearch has some of the most extensive data in the
industry. This is the 7th Annual FPD event and it is sold out
with nearly 4000 attendees. Attendees are from 17 countries
represented and 20 exhibitors present in the small exhibit area.
State of the FPD Industry
As is the custom, DisplaySearch provides multiple overviews of
sectors of the display industry. Ross Young, President & CEO,
DisplaySearch, provided one of the overall FPD industry.
The TFT LCD industry had its best year in 2004 with a 45%
rise in sales to $48.5B in revenue. This was split by 47% in
the large areas displays and 41% in the small area units.
Net profit margins grew by 28% in H1 2004 but due to the
crystal cycle prices rose in H2 only to collapse in Q4, due
to much lower prices as inventory built. What is different
in this cycle is that capital spending was not cut as a
result of the slide in prices.
The crystal cycle has the following elements:
Prices Rise
Over-Investment
Demand Slows
Surplus
Prices Fall
Under-Investment
Little Capacity Added
Shortage
Back to Prices Rise and the cycle continues
This was a banner year with the overall display industry at
$62.2B up 42% from 2003. This growth was led by a 155%
growth in LCD TVs at $5.8B.
Street pricing of displays was like a roller coaster. The
15” LCD price began at $284 and rose to $354 only to plummet
to $253 at the end of the year.
One of the major factors leading to the continued investment
in fabs is the economies of scale from large glass
substrates. If a Gen 5 is used as the baseline with a glass
size of 1100 X 1399, the investment of equipment and land is
100%. A Gen 7 facility with glass at 2160 X 2460, the area
increase is 372% while the investment increase is only 207%.
Thus, as long as the increased capacity can be absorbed
there are significant advantages to large substrates. It was
stated that a new Samsung Gen 7 fab was the size of 5
football fields under one roof.
The net result of these economies of scale is that with a
Gen 7 fab depreciation is only 9% while materials rises to
74%. Thus, there are incentives for the fabricators of TFT
LCD panels to lower the cost of materials, including doing
what can be done in house such as color filters.
HP Views the Market
HP had two speakers: Deborah Nelson VP of Marketing and John
Morriss, VP and GM, HP Displays Business Unit. The first spoke of
the convergence of IT and CE. It was touted that content is king
and a $500B market opportunity lies ahead. It was even stated
that “IT companies have the edge (in the convergence of IT and
CE) on how to rationalize the technology to consumers.” HP was
claimed to be a leader because it has a go-to-market strategy,
portfolio, technology and alliances. John Morriss gave the
audience a lecture on the chasm and the consumer
needs/satisfaction curve of technology. The union of these two
concepts makes it possible to win in consumer markets because it
is now possible to “move from high-tech to commodity based
products…as [manufacturers] adjust their mind-set to better suite
the needs of customers.” Coming from HP it was a surprise to hear
such trivial and superficial market characterization.
Samsung – HDTV Changes the Landscape of the Television Display
Market
Jim Sanduski gave a fast running overview of the impact of the
HDTVs on the display industry. This was all focused on the US
market.
DTV will have entered the “tipping point” when in 2004 there
were 7.2m units shipped, that went to 10.8m in 2005 and to
16.8m in 2006.
The television market is seasonal with 30% of the units sold
in Q4 and in flat panel this rises to over 40%.
The market is very price sensitive with 67% of the sets sold
for less than $400. Only 18% of the sets sold above $1,000.
DLP technology has a large advantage as the screen size
rises 42” and above. At retail DLP is 55% of the PDP price
in the size 42” to 46”, at 50” the ratio is 45% and it falls
to 28” at 50” and above. Thus, Samsung expects that DLP will
dominate the large display panels.
With the success of microdisplay technology Jim predicted
the end of the market for CRT rear projection televisions.
In spite of the fact that no content exists, 1080p, the
highest resolution in the ATSC table of 18 formats, is seen
as the next frontier for consumer displays. A 720p display
has .9m pixels while a 1080p display has 2.1m pixels. One
derivative of this display size is the ability to sell
larger displays. That is, at a 7’ distance, one can see no
scan lines on a 55” display in a “typical” living room. With
Blu-Ray it is felt that content will begin to appear in
later 2005.
Is the LCD Industry Headed for a Train Wreck?
The focus shifted to the TV opportunity for flat panel displays.
Earlier, it was discussed how this crystal cycle is unusual in
that the “capital spending was not cut as a result of the slide
in prices.” The reason for this is that the LCD manufacturers are
betting on the 170m+ television market rolling to LCD
televisions. Slight problem - there is already capacity to
produce 100m units for just the television market in 2006 and
this is well above what the market is likely to absorb. We posed
the question – with so many sharp individuals in this business
why is there a herd mentality to build more fabs knowing full
well that the market will be oversaturated with suppliers? The
response we got from DisplaySearch was – there is too much money
around to build fabs and that every company expects it will be
the big winner. Slight problem – there is no big market after
televisions are penetrated. It seems as if every company is
staring into the headlights of the train.
Ross Young on the Television Market
The television market is the major opportunity for flat panels.
This is not just an HD market but is about replacing old with the
new. As a result the LCD television makers see this is a huge
opportunity. The problem is that this is the last LCD market to
penetrate. With success in phones, notebooks and continuing
success in monitors for desktop PCs the television market is the
last major hurdle. As a result there is great anticipation on
winning this in this space. The highly price sensitive television
market means that those with economies of scale have the best
chance of winning. As we heard before this implies companies with
Gen 7 fabs with the largest glass substrates. The problem is that
everyone has the same expectation and all cannot be winners.
Ross’s talk provided excellent background.
The television market is growing at a modest 7% per year. In
2004 187.9m sets were sold and by 2008 it is expected to
rise to 212m. The overall market is at $76.1B in 2004 and is
expected to rise to $121.1B. This means that the revenues
and ASP will grow faster than the unit rise. ASP will rise
from $405 in 2004 to $571 in 2008.
If there is uniformity on one trend it will be the death of
the CRT rear projection market. This is be replaced by the
MD (micro-display) rear projection market.
From 2004 to 2008, DisplaySearch predicts that the LCD
television market will grow from 8.8m units to 46.8m units
while CRTs will go from 170.8m units to 144.6m units. This
means the share of sales in LCD will rise from 4.5% to 22.1%
while CRTs will decline from 90.8% to 68.2%.
Yet, Ross stated that the industry is capable of 100m units
of televisions in 2006 and still meet all the other LCD
requirements. Thus, the excess capacity in 2006 could be 70m
units if all the LCD fabs ran at capacity. If this is the
case there would be a huge glut of product on the market.
It is interesting to note that China will over take North
America in terms of units of all types of televisions sold
in 2006.
This will lead to very aggressive pricing for 2005 holiday
season. It was predicted that 32” LCD televisions would
reach $999 and 37” be at $1499.
It was also estimated that 1080p would enter the market, at
only a small price above 720p, in 2006. Sizes at small as
32” are already on roadmaps.
In spite of the dramatic price declines it is expected that
42” PDP prices will be lower than 42” HD LCD prices.
In terms of size the 30” to 34” category will be the most
popular to 2006. By 2008 the 40” – 44” will become the most
popular category.
A glut of PDP is also present. In 2005 this is estimated to
be 13% and rises to 23.1% in 2008.
OLEDs – Where is it Going?
Ross Young gave his interesting and provocative overview of the
OLED. Key points include:
The early application of OLED could well be in MP3 players
and personal media players. The cell phone sub display was
short lived and has since largely disappeared. OLEDs had no
market advantage.
Major drivers on costs include: yield, time to fabricate a
module, equipment utilization and the efficiency of material
use. There still remain many questions on the best
techniques to use for fabrication.
Active backplanes remain a major issue. LTPS remains the
technology of choice but there are significant challenges in
fab execution and bringing this to market.
Aging of the color output is another issue. Results were
shown that showed a strong color shift in as little as 1000
hours.
On the optimistic side there is the prospect that OLED could
be only 41% higher than CSTN and 32% less than TFT in small
displays – 1.6” to 1.8”.
DisplaySearch predicts 200m units of OLED by 2007 with over
100m going into cell phones.
It is estimated that there could be 22 companies in OLED by
2007.
The major issue lies in the backplane. If these can be
addressed it is estimated that the industry could grow to
$5B.
Dice Roll Gamble in OLED – Lowering Expectations
Eastman Kodak was muted in its presentation on the status of
OLED. Gone were the enthusiastic predictions for OLED. In
general, lifetimes are up, yields are improving but caution is
everywhere. The reality is that OLEDs cannot justify a price
premium. To get to price parity OLEDs must gain high yields, have
high light efficiency, be efficient in production and execute in
the market. Over and over we heard this will take at least 2
years and possibly more. The gnawing question is – can OLEDs get
to market quickly enough to have an impact or will the window
close?
For the company that began OLED developments it was an unusual
position. The CEO said it best in a recent interview.
In an interview in the February 2005 issue of Photo
Marketing Magazine, Daniel Carp, chairman and CEO, Eastman
Kodak Co. responded to a question about OLED.
Photo Marketing: What about OLED? That was a high-profile
technology, but it seems to be de-emphasized now.
Carp: Two things happened. It’s proven to be much harder to
execute than anyone thought. It’s not just Kodak, either.
It’s just not coming up the yield curve to make it
economically feasible. So it looks like it’s further out.
There’s been an explosion in investment in billion-
dollar plants for LCD materials. At the same time OLED
got pushed out, LCD got better.
There is no doubt OLED will be a big business, but it’s
pretty far outside our planning interval right now.
We’re still looking at how we want to participate. We
are still working with Sanyo, but we’ll have to see
what is the right thing to do.
The presentation by G. Rajeswaran, Eastman Kodak mostly reviewed
Kodak’s technology. Listed as musts for OLED were:
Performance must be competitive with AMLCDs
Costs must be competitive with AMLCDs
Applications must cover small and large displays
Market share must expand into AMLCD space.
Tall order given that this list does not emphasize the unique
strengths of OLED. It was stated that for OLED to be competitive
with AMLCD it must be fabricated on backplanes of Gen 4 size, not
smaller. Kodak concluded with:
AMOLED technology of 2004 is not sufficient yet to meet cost
performance targets of display manufactures.
We can only conclude the future of Eastman Kodak in OLED is in
question.
Out-of-Box Display Applications Emerge
The key to consuming all the panels that can be generated by the
advanced fabs is to sell more glass panels per person. This was
addressed in a number of ways in the applications track today. LG
Philips wants to put displays everywhere, on walls, on window
glass, in mirrors, throughout automobiles and in public places.
Sharp sees ubiquitous displays in small screens that cover all
types of hand held devices. They describe the key to future
markets as displays which are smaller, thinner, lighter, easier
to read and with lower power. As part of this displays will be
moving to 400ppi in 2006. DisplaySearch took the broadest view of
the market and saw displays in: smart cards, shelf labels, auto
consoles, displaywear, digital signage, see through walls, paste
on the wall televisions and wrist televisions. A simple market
estimate rolled up $20B.
DisplaySearch Estimates a $20B non-standard Display Applications
Market
Barry Young of DisplaySearch sought to stimulate the thinking of
the audience by going beyond the traditional display
applications. He began by suggesting that the “holy grail” of
displays is the transparent display. This is a display one can
hold up and it is totally clear except for a small frame. Like a
window whose transparency varies based on what is displayed.
Barry went so far to suggest such technology is not far fetched.
Applications include: display windows, room separators,
automobile windows, and 3d gambling in casinos.
The industry is fixated on the top 6 applications: desktop
monitors, LCD TV, mobil telephone, notebook PC and industrial but
there is much more than this. Three examples cited are MP3 and
Personal Media Players, mobil phone sub display, public displays
and eBooks/Digital Picture frames. But this list is even greater
than this and includes:
Smart cards,
Shelf labels,
Auto consoles,
Displaywear,
Digital signage,
See-through walls,
Paste-on-the-wall televisions, and
Wrist televisions
This also has significant technology requirements that include:
Low Cost/Low Power
Robust Printable TFTs
Flexible displays
Low Cost Flexible displays
Transparent displays
Conformable displays
Roll to Roll process.
If one just makes the following assumptions with reasonable
display prices it is easy to rack up a potential market of $10B.
2B Smart cards
30M automobiles
1B shelf displays
100m digital signs
40m wrist displays
Adding in displaywear, transparent walls and past on wall TVs, it
is possible to see a potential $20B market.
eMagin – Creating OLED on Silicon
Gary Jones, CEO of eMagin, described his products as virtual
imaging. These are near eye displays that one wears. The sound
bite is that you can carry around a 105” screen with you. The
value of OLED-on-Silicon is that it offers: interface logic on
the display, full color data buffers under each pixel and wide
angle viewing. It is also low power. Gary Held up its new Z800
displays which supports:
Virtual 105” view at 12”
800 X 3 X 600 pixels
Stereovision
Stereo sound
Noise canceling mic
USB power only.
Displays Everywhere you Shop
Matt Harris of Planar proposed that there is a major market for
retail displays. This includes: shopping, dining and hosting
(lodging, amusement and similar). Examples retail placement
include: shopping carts, promotional signage, window display,
product ordering, gift enrollment and much more. They binned the
retail environment as Attract, Interact and Transact.
Creating a Digital Signage Network
Scala advocates a network to make digital signage possible
everywhere. They have deployed 25,000 display units worldwide.
The key value added that they bring is the software to support so
many displays in a real time environment. Primary markets
include: retail, corporate communications, call centers,
entertainment venues and digital menu boards. Secondary markets
include: medical offices, auto care, banks, airports, education,
real estate and hospitality. The third level channels include
outdoor, shopping malls and airports.
To be successful it was suggested that these rules will drive the
emerging industry:
Content is king
Make it lively
Local buy-in is critical
Location, Location, Location
Is it easy to do small updates
You need a closed loop system
Employee-oriented content is important
Sell signage like end caps
Don’t fight the PC industry
Does it scale?
The point of the PC industry is a display which is a Panasonic
Plugin PC which makes any 42”, 50” and 65” display an IP
addressable PC. This even includes the ability to make an
individual display wireless addressable. This is very powerful.
WAVE Comments
The two examples of displays everywhere bordered on the extreme.
For example, Scala cited how effective it was at driving the
average purchase up in a fast food setting. Planar cited how the
patient waiting room was the ideal place for drug companies to
run promotional advertising while the patients waited. This all
creates an environment of visual bombardment. The ratio of ads to
content on national television is gotten so bad that consumers
use PVR’s to rid the junk. So now the objectives of displays
everywhere is to just increase the level of visual pollution. One
comes away with the impression that the objective of the
technology is to treat the consumer as a mindless automat that
easily succumbs to visual suggestion to spend more money. How can
marketing be so naive? Consumers tire of being told what to do,
how to do it and that all they are is pockets to be picked by
astute marketing. Are we so bipolar as to believe that the world
is only populated by smart marketing and dumb consumers? Surely
displays have more value than being tools of the blind marketer
who is so sightless as to believe that one only has to sell, sell
and sell to pick consumer pockets.
Wave Issue 0513 4/1/05 Article 1-01