DisplaySearch Sees Flat Panel Display Growth Slowing Through 2015

According DisplaySearch’s latest Q4’08 Quarterly Worldwide FPD Forecast Report, business and consumer reactions to global economic conditions have changed the outlook for electronic display sales and shipments over the next seven years. One year ago, the Q3’07 Quarterly Worldwide FPD Forecast Report from DisplaySearch projected sales of flat panel displays would grow to $124 billion in 2009. That forecast represented information about producer shipment targets and analyst projections based on historical data through Q3’07. Since then, a normal decline in panel pricing caused by capacity expansion has been deepened by a basic change in consumer behavior in reaction to economic problems.

Consumer surveys and retail data compiled by NPD, DisplaySearch’s parent company, indicate that such behavioral changes may persist. In addition, consumers outside of Europe or North America face recessionary conditions. Therefore, the Q4’08 Quarterly Worldwide FPD Forecast Report predicts sales of $124 billion will not be reached until 2014, five years later than the Q4’07 report predicted.

“The difference in forecasted sales over the seven years from 2009 through 2015 totals $135 billion, representing a 15 percent decline from the Q4’07 forecast. Reduced price expectations create most of this difference. The prior report expected an average sales price of $32 in 2008 would decrease about 3 percent a year to $26 in 2015. The latest report estimates an average price of $29 for 2008 and expects it will decrease about 2 percent a year to $25 in 2015. Over the seven years, the average flat panel price prediction is 9 percent less than the earlier forecast. Unit shipment growth projections have changed less,” noted David Barnes, DisplaySearch’s Vice President of Strategic Analysis.

Both forecasts expected flat panel shipments would increase at a compound annual rate of 5 percent. The difference comes from a smaller base in 2008. The Q4’07 report estimated 4 percent more units would be shipped in 2008 than the results indicate were shipped. The average diagonal size of direct-view (non-projection) displays is another difference. The Q4’07 forecast predicted an average diagonal of 10.2” from 2009 to 2015, assuming an HD aspect ratio. The latest forecast predicts a larger average diagonal of 10.4” over the seven years. Combined with lower average unit price expectations, this implies that producers will obtain 11 percent less revenue per diagonal inch than expected previously. The good news is that consumers will get more display for their dollar, which makes sense in a more competitive market.

From the standpoint of technology, the greatest change in view comes from TFT LCD. That is the dominant flat panel technology. In 2008, DisplaySearch estimates that TFT LCD panels generated more than 89 percent of all flat panel sales. The current report expects this share will average more than 88 percent from 2009 through 2015. Being the dominant display technology, it must bear most of the forecast change. In fact, the seven-year forecast revision for TFT LCD sales totals $136 billion, which is greater than the total flat panel forecast change. The current view increases expectations for electrophoretic and related display technologies used in electronic books, which offsets part of the forecast reduction for TFT LCD sales.

From the standpoint of display application, this means most of the forecast change comes from decreased expectations for PC and mobile phone display sales. TFT LCD producers supply almost all of the panels used in these applications. The current forecast revises the seven year sales total for these applications downwards by 16 percent because the end-products have become commodities. LCD TV and plasma (PDP) TV products are becoming commodities. The forecast assumes the 87 percent share of TV panel sales obtained by TFT LCD producers in 2008 will vary only slightly from 2009 through 2015.

“DisplaySearch has revised the flat panel sales forecast for TV applications downwards 13 percent from the Q3’07 prediction. TFT LCD producers are beginning to react to less optimistic expectations by slowing the pace of capacity expansion and seeking ways to reduce semi-fixed costs, as evidenced by recent industry news,” Barnes added.

The DisplaySearch Q4’08 Quarterly Worldwide FPD Forecast Report provides detailed information on trends and opportunities in the flat-panel industry. The report evaluates 511 display types using 18 display technologies serving 40 applications. The Quarterly Worldwide FPD Forecast Report looks at quarterly data since Q1’98 to forecast sales, shipments and prices through Q4’15.

www.displaysearch.com