Markets for small displays — those used in mobile phones, PDAs, portable video, audio and game players, as well as automotive and navigation systems — are showing explosive growth. But profit margins are slim, and analysts expect shakeouts and consolidation.
The expansion of small-display production has been fuelled mainly by the exponential growth of cellphone shipments, which account for about 75% of the market. According to ABI Research analyst James Seifert, “This rapid expansion is drawing many new competitors into the marketplace — both current display makers who have excess capacity, and others who simply see the sector’s enormous potential. The downside is that the added competition puts tremendous pressure on prices. So while there’s remarkable growth, nobody seems to be making a lot of money out of it.”
ABI Research examines the global small-display market in a new study, LCD and OLED Display Technologies, which explores market opportunities for small/medium flat-panel displays, and analyzes key end-use applications that will drive demand.
Virtually all the world’s small/medium displays are made in three countries: Japan, Korea, and Taiwan. The Japanese invented and developed the technologies, the Koreans took manufacturing to the next level, and now the Taiwanese are producing high volumes at lower and lower cost.
What saves this market from complete commoditization is the sheer variety of display sizes, shapes and specifications. Virtually every device uses a different form-factor display. But that may soon change, as larger manufacturers settle on standard designs in order to squeeze weaker players and benefit from economies of scale.
This points to the likelihood of industry consolidation and shakeouts, notes Seifert. “Investors must identify those companies that have leading-edge technology or a commanding market position,” he says. “Examples include Sharp in Japan, Samsung in Korea, and AU Optronics or RiTdisplay in Taiwan. Investors may also be looking at up-and-coming companies that represent good takeover targets.”
