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Business Impact

Panel display market improving faster than expected, SKorean industry group chief says

ASAN, South Korea (AP) – The flat panel display market, hit by oversupply and price declines last year and into early 2007, seems to be improving faster than originally hoped, the head of a new grouping of South Korean flat panel display manufacturers said Wednesday.

”We initially expected that it would get better by the second half but it’s actually getting better now, about a month or two earlier than we expected,” said Lee Sang-wan, president of the Korea Display Industry Association.

Intense competition among manufacturers amid huge demand for products using panels, such as laptop computers, desktop monitors and flat screen televisions, have led to price declines. That has put panel makers under constant pressure to accurately read the market when planning new production.

”The LCD industry is very volatile so it’s either a shortage or oversupply,” Lee, president of Samsung Electronics Co.’s liquid crystal display business, told reporters in Asan, about 90 kilometers (55 miles) south of Seoul. ”It’s very hard to maintain balance.”

Asan, where Lee spoke, is home to S-LCD Corp., established in April 2004 by Samsung and Japan’s Sony Corp. to produce panels to meet soaring demand for flat screen televisions.

South Korea’s four leading makers of flat panel displays launched the association Monday, agreeing to work toward cross-licensing patents, buying products from each other and cooperating in research and development to battle increased competition from rivals in Japan and Taiwan.

The four – Samsung Electronics, Samsung SDI Co., LG Electronics Inc. and LG.Philips LCD Co. – also agreed to buy more panel components and equipment from South Korean manufacturers and reduce purchases from abroad.

Samsung Electronics and LG.Philips are the world’s two largest makers of LCDs, while Samsung SDI and LG Electronics manufacture plasma displays.

The four companies also agreed to try to standardize flat panel sizes to enhance their competitiveness in global markets, South Korea’s Ministry of Commerce, Industry and Energy said in announcing the association’s launch.

Samsung Electronics and LG.Philips, for example, make LCDs in different sizes, which would make it hard for Samsung to use LG.Philips’ panels. Samsung manufactures flat screen televisions. LG.Philips only makes panels and supplies them to other manufacturers.

Other competitors include Sharp Corp. and Matsushita Electric Industrial Co., both of Japan, and AU Optronics Corp. of Taiwan.

The rise of the South Korean display makers to the pinnacle of the industry has been dramatic, but they are facing tough competition, Lee said, especially these days from companies in Taiwan, where manufacturers are helped by government support and lower costs.

”Korean engineers cost double that of Taiwanese,” Lee said. ”And in general, the overall costs in Taiwan are much cheaper than we have here in Korea.”

Lee said that when Samsung first began producing LCD panels in 1995, the market was dominated by Japanese companies holding market share of more than 90 percent.

”We’ve grown really fast and in three years in the business we took the No. 1 position as a single firm since first producing our panels,” he said.

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