Touch Panel Market Growth

EMS Now has an interesting take on the Touch Panel Market. EMS Now writes:

Several makers of touch panels in Taiwan are expected to benefit from the booming global market for such panels, which is forecasted by DisplaySearch to grow 43.2% to reach US$1.8 billion this year.

Some institutional investors said Wintek Corp. is sure to turn profitable in August thanks to increasing shipments to Apple, Motorola, High Tech
Computer Corp. (HTC) and some portable navigation device (PND) makers.

Statistics compiled by Display Search, the worldwide leader in flat panel display (FPD) market research and consulting, showed that the global touch-panel market sales reached US$1.2 billion in 2007 and would increase to US$1.8 billion this year. Currently, the market share for increasingly-hot capacitor-type touch panels is about 12%, up from 9% in 2007. This indicated that cellphone touch-panels would be the major growth momentum in the global market and capacity-type technology would become the mainstream in mobile-telecom panel applications.

EMS Now continues saying:

Wintek chairman and president Hyley Huang pointed out that thanks to increasing orders from Motorola, Compal Communications Inc., and Qisda Corp. his company's B/B (book/bill) ratio outstripped 1 in June and rose to 1.3 in July. He added that Wintek's revenue growth momentum would come mainly from touch panels, thin film transistor-liquid crystal display (TFT-LCD) panels, and color super twisted nematic (STN) products.

Currently, Wintek is the world's largest supplier of black-and-white STN panels, the production value is declining along with the falling product prices.

I am glad for Wintek that they are seeing a way out of the mess they are in. They were hammered by declines in demand from Motorola when Motorola started to fall apart earlier in the year (see Motorola Affecting Downstream Suppliers.

The touch panel sector is indeed a growing market. More and more market sectors are demanding touch screen applications. In the idustrial PC sector we are seeing increased applications accross the full spectrum of products including kiosks, gaming machines, point-of-sales systems, automation devices and human machine interfaces.

There will certainly be an increased demand for touch panels on personal computing devices and it seems Wintek, and other companies, may be in a good position to leverage their current advantages and to work their way out of their slump.

EMS Now: Touch-panel makers eye growing global market

Panel Makers Focus on PND

Well the LCD industry it seems has followed the memory industry into a downswing. This has resulted in some companies realigning their focus and strategy. Some of the small-to-medium size panel makers are according to Digitimes hedging unstable demand in the digital frame and low cost PC markets by targeting the portable navigation device (PND) sector. Digitimes writes:

While AU Optronics (AUO) and TPD Displays have been the major LCD panel suppliers for portable navigation device (PND) applications, weakening small- to medium-size panel demand has made other LCD panel makers look to the segment as well, and prices are expected to drop accordingly, according to market sources.

With panel sizes for digital still camera (DSC) and PND applications being of a similar size and with an OEM customer base being concentrated in Taiwan, Taiwan panel makers have an opportunities to make headway in the PND segment. While demand growth in the PND market is slow, it is steady and stable, unlike the fluctuating orders seen in the digital photo frame and low-cost PC segments, the sources noted. However, prices for PND panels are expected to drop in the second half of the year.

Digitimes continues further on saying:

Chunghwa Picture Tubes (CPT) and Innolux are focusing on low-cost PC and PND panels for small-to-medium size product in the second half of the year, Wintek also entered the supply chain for PND panels in the second quarter. CPT indicated that demand for PND panel will grow but the overall price for small size panel will continue to drop.

Well I suppose they have to do something. They cannot just sit around and hope for the best.

Digitimes: LCD panel makers turning to PNDs for new orders

Foxconn Struggling

From the Taipei Times:

Foxconn International Holdings Ltd (富士康控股), the world’s largest contract maker of mobile phones, said it expects profitability to come under pressure this year because of rising competition and increased development costs.

“It’s a tough operating environment,” Foxconn chairman Samuel Chin (陳偉良) said after a shareholders’ meeting in Hong Kong yesterday. “We’re not immune — it definitely impacts us.”

Foxconn, the worst-performing stock in Hong Kong’s benchmark Hang Seng Index this year, is seeking more business from customers including Nokia Oyj and Samsung Electronics Co, the world’s two biggest handset companies, to compensate for lower sales to Motorola Inc.

Yeah, many Motorola suppliers are suffering. I know Wintek is still reeling from the loss of orders with a significant decline in their stock price. The impact of low-performing brands on suppliers can be significant. So, what should companies do when demand from their main customers decline? Diversify!

Wintek diversified their client base and their product portfolio. Spreading the risk is sensible and it seems the only thing a company can do. Many smaller companies build capacity in anticipation of the projected sales forecasts from their main customers. When these orders do not materialize the company naturally suffers from having excess capacity and reduced revenues.

According to the Taipei Times:

Motorola, Foxconn’s biggest customer (Motorola) in 2006, is still “having difficulties” and will “continue to impact” the Hong Kong-listed company, Chin said.

Foxconn got higher orders from “all other customers” to help offset lower sales to the US company last year, Chin said.

Well Foxconn, who are not a small company, have increased sales to their other clients. For a huge company like Foconn to find new customers is very difficult. They already are the dominant company in the industry and they probably (at a speculative guess) do a lot of work for most mobile phone brands.

Article: Foxconn expects further difficulties