South Korean Small Display Market Suppliers Saved by None Other than Apple

IHS iSuppli's new Small and Medium Sized Display Market (SMD) PriceTrak Report, which tracks the market for sales of liquid crystal displays (LCD) to smartphone and tablet original equipment manufacturers, points specifically to Apple as the key company behind an unexpectedly robust growth spurt in the South Korean panel suppliers sales. The group achieved a nine percent expansion in shipments compared to August 2012. The players in this market include the ubiquitous Samsung and LG.

Panel shipments from Samsung Display and LG Display totaled 48 million units in September, which is a somewhat unanticipated increase over August 2012 shipments of 44 million units. The combined panel shipments from the South Korean vendors' rival group, made up of six Taiwanese suppliers, actually declined by three percent during the same time, down to 166.8 million units from 172.3 million units shipped in August 2012.


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When combined, total shipments from both groups amounted to 214.8 million units, which represents an overall minor decline of 0.7 percent in market shipments compared to August 2012 total shipments of 216.3 million units.

Vinita Jakhanwal, director for small and medium displays at IHS notes that “Samsung continued to supply LCD panels for the iPad in September, although its monthly shipment volume to Apple declined compared to the first half of 2012. We anticipate that LG Display will take the leadership position in terms of supplying displays for the iPad product line. Along with sales to other top smartphone and tablet OEMs, the Apple business clearly helped both Korean companies improve their SMD display shipments.”

Apple’s New iPad Helps a Great Deal

Apple's release of the new iPad mini, which features a smaller 7.9-inch display (as opposed to the regular iPad's 9.7 inch screen) features the same in-plane switching (IPS) technology used with the bigger iPads, which allows for wider viewing angles. The iPad mini has a resolution of 1,024 by 768 pixels (163 pixels per inch) and does not use a Retina display. Apple’s entrance into the 7.x-inch tablet segment will likely spur increased demand among consumers for the smaller size category.

In turn, that growing demand for the panels will likely drive more suppliers to initiate strategies for production at newer, larger-generation fabs. Further, if Apple were to further decrease orders to Samsung (which we can anticipate to be the case going forward), it can and will likely open up opportunities for other tablet display suppliers such as AU Optronics and Chimei Innolux in Taiwan, and Sharp and others in Japan.

The flip side of the coin is that ramping up of yields for large-volume production, technical requirements and pricing issues remains a concern for some of the other suppliers. It is true that tablet panel pricing has increased, with new tablet products boosting prices overall in September for tablet PC panels to $49.65, up three percent from $48.35 in August 2012. Unfortunately, handset panel pricing in fact decreased 0.7 percent in September to $11.71, down from $11.79 a month earlier. So ultimately it is a mixed revenue bag here.

Drilling further down into the tablet PC panel segment shows that pricing rose or fell depending on the particular size segment involved. Pricing on average fell 0.6 percent month-over-month to $58.43 for 9.x-inch tablet panels. Pricing also declined for the 7.x-inch segment, down 1.2 percent to $46.27. The contraction in both the 9.x- and 7.x-inch segments was countered by a 19.8 percent surge in the 8.x-inch tablet PC segment to reach $53.19, following the introduction of the 8.9-inch, 1,920 by 1,200 pixel display of the Kindle Fire HD.

Ultimately, the popularity of the underlying products - as the Kindle Fire HD demonstrates, will drive pricing. It will be interesting to see how the anticipated Apple introduction of a retina quality iPad mini will shift pricing early next year.