The late-2009 shortage of LCD glass was expected to ease in the first quarter of this year, usually a slack time of the year for purchases of TV sets, monitors, and notebook PCs, the products that consume the largest amount of LCD real estate. But demand for display-centric products held up surprisingly well in Q1, so as February eased into March industry sources were seeing a 10% shortage in display substrates relative to panel demand, with shortages concentrating on Gen 5 sizes. At the same time, those sources were predicting a panel oversupply of about 7% for Q2.

Ken Werner
Senior Analyst and Editor

Then came the magnitude 6.4 earthquake in southern Taiwan on March 3. As it turned out, there were no disasters as far as the LCD glass and panel industries were concerned, but there were dislocations. Chi Mei stopped production, saying the stoppage would be brief. HannStar halted production at its Gen 5 plant in Tainan and said it would spend several days checking equipment before resuming production. Toppan CFI’s color filter lines in southern Taiwan may have been closed for evaluation, DisplaySearch reported.

Glass production was largely unaffected at Corning but some substrates that were in process during the quake had to be scrapped, while one of the five melting tanks at AvanStrate was shut down during the quake. AvanStrate, which supplies CMO and HannStar primarily, has less than 6% of the glass market so the impact can’t be great.

The result of all this is that the LCD panel oversupply for Q2 is expected to be reduced (from about 7% to about 5%), which will reduce or even eliminate downward pricing pressure. Since panel production was affected slightly but glass production was affected very little, the glass substrate shortage should also ease earlier than expected because of this reduced panel production. It was expected to ease during the seasonally slack Q2 in any case, but now we should see an easing in March.

This might be a good time to review the horse race among the leading suppliers of large LCD panels, using data supplied by iSuppli. LG Display was the leader in units shipped worldwide in January, with 24.8% of the total. Samsung was next with 22.5%, then AUO (17.5%), CMO (13.3%), Innolux (4.4%), CPT (3.9%), HannStar (3.0%), Sharp (3.0%), IVO (2.8%), BOE-OT/Hydis (2.0%).

What’s interesting here, other than whether LGD’s or Samsung’s horse is ahead? (Although we shouldn’t dismiss that. In this horse race, a difference of 2% in global shipments represents a lot of Korean Won.) Well, if we add the shares of CMO and Innolux, we get 17.7%, which would place the merged company in third place, slightly ahead of AUO. As we’ve said before, AUO gives no indication of being intimidated by a merged Chi Mei Innolux. In fact, earlier today AUO announced it intends to recruit 2500 new employees in 2010, to be distributed among its LCD, photovoltaic, and recently revived OLED businesses. AUO is looking for new college grads and managers, including people from overseas. Go West, young man.