TFT-LCD equipment market set for recovery in 2010

Austin, Tex. — The TFT-LCD equipment sector is projected to grow 51 percent in 2010, after suffering its largest drop in 2009, with revenues falling 50 percent year-on-year (Y/Y), according to DisplaySearch.

“The worst of the worst Crystal Cycle in the history of LCDs certainly has passed,” said Charles Annis, DisplaySearch’s vice president of Manufacturing Research, in a statement. “Rapid panel price declines from the end of 2008 through the spring of 2009 helped push demand further than expected. Additional strong demand from China is now encouraging panel makers to move forward with capacity expansions in 2010.”

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Source: DisplaySearch Q3’09 Quarterly FPD Supply/Demand and Capital Spending Report

The third quarter of 2009 improved significantly by all metrics, according to DisplaySearch. The DisplaySearch supply/demand index fell into the tight zone below 10 percent and average industry utilization rose to 88 percent. In addition, most TFT-LCD makers were profitable in the third quarter, with some reaching profit margins as high as 15 percent, said DisplaySearch.

However, the LCD industry remains inherently cyclical and is expected to be burdened by over-capacity and lower prices during the seasonally weak quarters (Q4 2009 and Q1 2010) before recovering to healthy levels in the spring of 2010, according to DisplaySearch.

China is rapidly becoming the largest consumer of LCDs and has the potential to spur further growth in the LCD industry, according to the market researcher. Although China currently only accounts for a 3.7 percent share of total TFT-LCD capacity, this is expected to grow steadily to 7.4 percent in 2012 and even higher beyond 2012 as several foreign and local Chinese panel makers are planning Gen 7 and 8 fabs, said DisplaySearch.