DisplaySearch reports indicate weakness in small/medium display markets

MARCH 8--DisplaySearch (Austin, TX;www.displaysearch.com), FPD market research and consulting firm, revealed its latest pricing and shipment results for small/medium display applications in two recently published reports. The Q1'02 Quarterly Small/Medium LCD Shipment Report indicates that all six small/medium markets examined in Q4'01--mobile phones, PDAs, hand-held PCs, automotive monitors, video cameras, and digital cameras--experienced double-digit declines in revenues, and all but the digital-camera market experienced double-digit declines.

The Q1'02 Quarterly Small/Medium LCD Pricing Report reveals that all display technologies (monochrome STN LCDs, color STN LCDs, and TFT LCDs) in each of the six markets suffered double-digit ASP declines in Q4'01, with these declines continuing into Q1'02. In addition, color STN LCDs and TFT LCDs are expected to fall at least 22% year-to-year in both Q2'02 and Q3'02. With numerous TFT LCD producers increasing their emphasis on small/medium markets last year and with growth stagnant, pricing pressure is increasing. This weakness is also evidenced by the low utilization rates quantified by DisplaySearch at the fabs of the small/medium producers.

While the small/medium markets are experiencing revenue, unit, and ASP declines, large-area markets for TFT LCDs have recovered, with units up 75% year-to-year in Q4'01 and revenues up 2.4% year-to-year, the first annual revenue increase since Q3'00. The large-area market should enjoy better financial results than those focused on the small/medium market.

However, the reports do indicate some positive signs for small/medium display producers. Unit shipments are expected to recover in all small/medium segments on a year-to-year basis, except for hand-held PCs, in Q2'02. The mobile-phone and PDA display markets will experience revenue growth in Q2'02. In addition, TFT LCD penetration will increase in both Q1'02 and Q2'02 in the mobile-phone market and in Q2'02 in the PDA market. Despite the higher penetration of more expensive displays, blended ASPs will continue to fall, which, although bad news for display producers, is good news for users and display procurement managers.