DisplaySearch FPD 2005
By John Latta, WAVE
0513 4/1/05
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 400 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. Barry Young, SVP& CFO,
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.
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