Seattle Cost was at the forefront of the minds of makers of thin-film-transistor liquid-crystal displays who came to the Society for Information Display conference here last week.
The LCD industry has spent billions during the last few years to build fabs that can handle the large glass sizes needed for flat-panel TVs. With flat-panel TVs generating much of the buzz in exhibits and during various discussions at SID, suppliers were counting on their costly Generation 5, 6 and 7 fabs to help them meet the expected surge in LCD TV demand. But component shortages, process concerns and continuing competition from plasma and rear-projection technologies may cause a few stumbles on the way to the goal of more, larger and, ultimately, less costly display panels.
"It is about productivity, and so far we are increasing productivity by increasing substrate size," said Budiman Sastra, executive vice president and chief technology officer of LG.Philips LCD. "But at some point, there will be the law of diminishing returns."
And even as more LCD TV panels become available, there's a cloud of uncertainty hovering over the market. Most important, panel prices, though dropping, have a ways to go if they are to reach the price points consumers are willing to pay.
"There is big uncertainty in prices, market forecast and rapidly changing technology," said Jun Souk, executive vice president of Samsung Electronics Co. Ltd. Along with South Korean rival LG.Philips LCD, Samsung has been battling for the top spot in LCD revenue and units for the past several years. Souk said that a 42-inch flat-panel LCD TV now costs twice as much as an equivalent-size plasma screen, for instance. But he expects the differential to narrow once Samsung opens its seventh-generation fab in Korea next year. "We expect to break the $1,000 barrier for 40-inch panels by 2005 with Generation 7," said Souk.
The cost reductions, according to Souk, would stem from the new fab's ability to process motherglass sizes as large as 1,870 x 2,200 mm. This would allow a single glass substrate to yield up to eight 40-inch panels, compared with eight 32-inch panels for a Generation 6 fab. The fab would be optimized to handle panels that are 22, 26, 32, 40 and 46 inches on the diagonal.
LG.Philips has begun volume production of 37-inch LCD TV panels at its Generation 5 fab, and Sharp Corp. opened a Generation 6 fab in Kameyama City, Japan, in January to expand production of 26- to 40-inch-plus TV panels.
With Taiwan-based LCD suppliers like AU Optronics Corp. also ramping up production at Generation 5 fabs, the cumulative amount of LCD fab capacity being installed in 2004 exceeds that of the past three years combined, according to DisplaySearch Inc. (Austin, Texas). The massive capacity expansion has the potential to create a glut, said DisplaySearch analyst Ross Young. "The industry needs to absorb the 2004 capacity," he said. Yielded LCD capacity is projected to reach 18.5 million square meters this year, up 53 percent from 12.1 million in 2003, DisplaySearch said.
Though analysts hint of the possibility of a near-term LCD surplus, a bigger concern is continuing shortages of such parts as filters, polarizers, drivers and display glass for large panels, which may hamper suppliers' ability to meet demand and ascend the size curve.
For instance, TV market demand outstripped projected needs for display glass, said Peter Bocko, division vice president and director of technology strategy for the Display Group of Corning Inc. (Corning, N.Y.). He said Corning was investing more than $700 million to expand glass production facilities in Shizuoka, Japan, and Tainan, Taiwan, in addition to building a new LCD glass plant in Taiwan Science Park (Taichung, Taiwan).
Size vs. cost
"There's a trade-off between how big the glass gets and plant costs," said Robert Bachrach, director of technology for AKT Inc., a supplier of continuous-vapor deposition equipment, which is used in LCD manufacturing. "Going forward, the trade-off could be what you do with large glass sizes vs. the need to drive down manufacturing cost."
Even as LCDs increase in size and come down in price, competing display technologies are also likely to pose stiff competition. For instance, plasma displays are moving into the mainstream, said David Mentley, an analyst for iSuppli/Stanford Resources (San Jose, Calif.). "The technology is maturing, and costs are expected to drop below $1 per square inch by 2006."
Larry Weber, former vice president of plasma display maker Plasmaco, said the attributes LCD makers were trying to achieve wide viewing angle, high contrast ratio and high brightness were already present in plasma screens. This will make it difficult for LCDs to compete in the high-definition TV market, he said.
LCD makers believe they can at least invade plasma turf, considered by many to be in the area of 42 inches and above. "We think we can take a chunk out of the plasma market at under 45 inches," said Joel Pollack, vice president of the Displays Business Unit for Sharp Microelectronics of the Americas (Camas, Wash.). "Plasma companies don't have the economies of scale and installed customer base."