Although the electronics industry continues to explore alternatives to LCD technology, it is still a major player in electronics products. The technologies that support LCD, such as driver ICs, have a vested interest in the success of the LCD market.
There have been some significant developments in the LCD driver IC and the touch IC market over the past year, according to the Global and China Display IC Industry Report, 2014-2015. Two major acquisitions occurred in 2014: Synaptic took over the small and medium-sized driver IC business of Renesas; and FocalTech (the world's largest touch IC vendor by shipment) acquired Orise. Additionally, OGS touch giant Wintek went bankrupt due to a debt crisis.
LCD diver IC manufacturers are facing a revenue squeeze, according the the report. Except for the 4K TV market, the LCD driver IC industry made little headway last year. Although the display resolution of mobile phones has greatly improved, the ASP of LCD driver ICs did not increase. After years of rapid growth, the mobile phone market has become saturated, and even the growth rate of smartphones has slowed considerably. Second and third-tier brand vendors witnessed substantial declines in mobile phone shipments. This, in turn, has affected demand for LCD screens and the ICs that support them.
In 2014, the Chinese mobile phone market saw the first decline in the past 15 years, and cumulative shipments decreased by 21.9 percent from 579 million units in 2013 to 452 million units, in which the shipment of handsets under domestic brands fell 23.3 percent. China's smartphone shipments amounted to 389 million units in 2014, marking China as still the world's largest smartphone market, but this figure was 8.2 percent lower than 2013. Tablet PC shipments dropped for three consecutive quarters, and many Chinese small and medium-sized tablet PC vendors collapsed. The only bright spot is 4K TV. After experiencing the first wave of replacing CRTs with LCDs, the TV industry is in the midst of the second wave of replacement. Larger screens, lower prices and more high-resolution program sources stimulate the TV market.
Touch ICs experienced a painful year in 2014. The yield of In-CELL / On-Cell was improved significantly while prices slumped. For example, FocalTech's touch IC ASP was NTD47.28 in 2011, NTD27.98 in 2013 and NTD18.15 in Q3 2014, representing a rate of decline of 61.6 percent. It is clear that there is a trend toward In-CELL / On-Cell using a combination of LCD driver ICs and touch ICs, which costs more but intensifies performance and shortens the supply chain. In 2018, the market share of In-CELL / On-Cell is expected to exceed 65 percent. In this case, touch IC vendors must restructure, such as Synaptic, which took over the small and medium-sized driver IC business of Renesas; as well as FocalTech that acquired Orise.
In order to retain customers and quickly gain market share for new products, touch IC vendors have reduced prices amid the sluggish mobile phone market. This has resulted in a sharp decline of gross margin. This trend will continue in 2015, and ASPs may flop by 20 percent to 30 percent.
The report concludes that small Out-cell touch IC vendors will find it difficult to survive independently in the future and may be acquired by LCD driver IC vendors or closed down. Touch IC vendors should avoid the mobile phone and tablet PC markets; while industrial control and automotive fields are better options. To read the full report: http://www.reportlinker.com/p02670514-summary/view-report.html