Panasonic to Exit LCD Business, Again
www.auo.com/en-globalJapan’s Panasonic (6752.JP) has announced that it will be withdrawing from the LCD panel production business and would be taking bids on a wide variety of equipment and instruments that are part of its remaining Gen 8.5 production line, color filter line, and assembly lines. The Gen 8.5 fab in Himeji, Japan has been focused on producing medical displays for the last few years, with a stated capacity of 50,000 sheets/month, but we expect the lines have been producing at much lower rates. Panasonic has indicated it was to be exiting the LCD production business previously, although we believe there is little chance they can survive in the current highly competitive environment, particularly against Chinese producers.
Last year Panasonic’s LCD panel business generated between 17m and 20m per month, a pittance compared to Taiwan’s AU Optronics (AUOTY) $600 to $800m monthly rate or BOE’s (200725.CH) 1b to 1.7b, so it will have little or no impact on global LCD production capacity, with Panasonic having been a purchaser of LCD TV panels from China’s TCL (000100.CH) and others for its TV set business, and with the ‘based on fierce competition and changes in the environment’, Panasonic’s stated reasoning for the closure, they are also expected to close assembly plants in India and Vietnam later this year. Given the availability of OEM services associated with or attached to other panel producers, it seems they have no reason to assemble product themselves.
While Japan has moved far from the leading position in LCD panel production that it had years ago, with only Sharp (6753.JP), which is owned by Taiwan’s Foxconn (2354.TT), and Japan Display (6740.JP) that is owned by private equity, the LCD panel production business has left Japan. That said, as we have noted in the past, Japan is still a dominant player in the upstream display business, owning 90% of polyimide production (flexible substrates and plastic cover films), photoresist, and Hydrogen Fluoride etchant, all key materials used in display and semiconductor production, and a recent study of components in the popular Huawei (pvt) P30 Pro smartphone, indicated that 869 (53%) of the 1,631 parts in the phone were produced in Japan. As we noted last year, Japan’s revisions to its trade policies with South Korea over a WWII dispute almost caused semiconductor production to grind to a halt when they limited some of those materials and while both South Korea and China have set themselves on a path to reduce their dependence on Japan for such strategic materials, that path is one that will take many years to develop. Panasonic might be out, but Japan still has a bit of a hold on the global panel business despite its more reserved image.
Last year Panasonic’s LCD panel business generated between 17m and 20m per month, a pittance compared to Taiwan’s AU Optronics (AUOTY) $600 to $800m monthly rate or BOE’s (200725.CH) 1b to 1.7b, so it will have little or no impact on global LCD production capacity, with Panasonic having been a purchaser of LCD TV panels from China’s TCL (000100.CH) and others for its TV set business, and with the ‘based on fierce competition and changes in the environment’, Panasonic’s stated reasoning for the closure, they are also expected to close assembly plants in India and Vietnam later this year. Given the availability of OEM services associated with or attached to other panel producers, it seems they have no reason to assemble product themselves.
While Japan has moved far from the leading position in LCD panel production that it had years ago, with only Sharp (6753.JP), which is owned by Taiwan’s Foxconn (2354.TT), and Japan Display (6740.JP) that is owned by private equity, the LCD panel production business has left Japan. That said, as we have noted in the past, Japan is still a dominant player in the upstream display business, owning 90% of polyimide production (flexible substrates and plastic cover films), photoresist, and Hydrogen Fluoride etchant, all key materials used in display and semiconductor production, and a recent study of components in the popular Huawei (pvt) P30 Pro smartphone, indicated that 869 (53%) of the 1,631 parts in the phone were produced in Japan. As we noted last year, Japan’s revisions to its trade policies with South Korea over a WWII dispute almost caused semiconductor production to grind to a halt when they limited some of those materials and while both South Korea and China have set themselves on a path to reduce their dependence on Japan for such strategic materials, that path is one that will take many years to develop. Panasonic might be out, but Japan still has a bit of a hold on the global panel business despite its more reserved image.
RSS Feed