Deepa Mathew. "The impact of this driver is expected to remain high in the short and long terms as LCD TVs make greater headway into markets traditionally dominated by CRTs."
To meet the demand for flat panels in various applications, assemblers are ramping up production by increasing the capacities of existing facilities and investing in new generation fabrication facilities. The year 2006 saw increased adoption of Generation 6 equipment as well as the establishment of Generation 7 fabrication facilities.
Despite the increase in panel sizes, the sales of older generation equipment will not come to a standstill as desktop monitors, cell phones and other electronics utilize smaller display sizes. Countries such as China will continue to see investment in older generation equipment as they manufacture large volumes of small-sized displays.
New fabrication facilities and the installation of next-generation equipment, entail considerable costs. Given these costs, LCD panel manufacturers are understandably cautious about committing to such a massive investment. Furthermore, the market's fierce competition leads to extreme price pressures, further compounded by the fall in glass substrates' prices. Therefore, in order for equipment vendors to maintain profitability, they must manage cost structures and find new ways to control costs.
"Cost structures can be effectively managed by adopting improved process flow across the assembly floor and designing machines with greater productivity and throughput," says Mathew. "Associating and forming strategic partnerships with other market participants and customers that can complement their product line or help penetrate newer markets could also help in lowering risks."
