Jonathan Cassell is the editorial director and manager, public relations for the market research firm iSuppli Corp. (El Segundo, Calif.)
It's obvious that the rise of Liquid Crystal Display (LCD) Digital Televisions (DTVs) is reshaping the global television and display industries — but the phenomenal expansion also is impacting the wider electronics business, affecting diverse areas ranging from semiconductor production, to the overall chip market, to contract manufacturing.
An examination of iSuppli's vast library of research illustrates the significant impact LCD-TV is having on the global electronics supply chain, including:
*Revenue from sales of semiconductors for DTVs, a category that includes LCD-TVs, will more than double between 2006 and 2010.
*LCD-TVs will account for nearly half of the revenue in the global large-sized LCD panel market by 2010.
*By 2010, LCD-TVs will represent nearly three quarters of total worldwide television manufacturing revenue, up from less than one-third in 2005.
*Contract manufacturers will produce 38 percent of LCD-TVs in 2010, up from 30 percent in 2006.
This article examines some of the fundamental changes that LCD-TVs are bringing to the global electronics supply chain.
LCD-TV shipments rise by a factor of 100
Worldwide shipments of LCD-TVs are expected to rise to 126.9 million units in 2010, increasing at a Compound Annual Growth Rate (CAGR) of 35.1 percent from 38.1 million units in 2005, according to data from iSuppli's Television Systems service.
Looking at the longer-term history, LCD shipments in 2010 will have risen at a CAGR of 77.1 percent from 1.3 million units in 2002. This means that shipments will rise by nearly a factor of 100 during the period from 2002 to 2010.
Such a rapid rate of growth is affecting the global electronics supply chain significantly, starting with semiconductor manufacturing.
Extensive chip consumption
Partly because LCD-TVs are inherently digital, they have a higher level of semiconductor content than conventional analog sets. LCD televisions have an average of $44 worth of semiconductor content in 2006, according to iSuppli's Digital Television Semiconductors service.
In contrast, the average analog color TV in 2006 contains only $16.87 worth of semiconductors, iSuppli's Application Market Forecast Tool (AMFT) reveals. With more than two-and-a-half times more chip content per unit, and such a fast growth rate, LCDs are becoming a significant factor in the global semiconductor manufacturing business.
DTV eats wafers
In 2002, the DTV segment — a category that includes and is increasingly dominated by LCD-TVs — accounted for less than 1 percent of global chip production when measured in terms of square inches on semiconductor wafers, according to iSuppli's Semiconductor Application Market Forecast Tool.
However, this will grow to 4.6 percent by 2010, up from 2.9 percent in 2006. While this may appear to represent a small slice of global semiconductor wafer usage, it's important to put this figure into perspective.
Mobile PCs, which represent a cornerstone application for the global semiconductor business, will account for 6.2 percent of global wafer square inches in 2006. Thus, by 2010, DTVs will be in a similar range as mobile PCs were this year in terms of wafer square inches.
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