Taiwan Earthquake Affects Large-sized LCD Panel Production

The 6.4 magnitude earthquake that struck Taiwan yesterday, March 4, has suspended production of large-sized LCD panels in the country’s Tainan Science Park area due to safety reasons. While not all of their production facilities were shut down, the panel suppliers known to be impacted by this production stoppage accounted for 16.4 percent of global shipments of large-sized LCD panels in January, according to iSuppli Corp.

The earthquake has caused Taiwanese firms Chi Mei Optoelectronics (CMO) and HannStar Display Corp. to temporarily stop manufacturing large-sized LCDs at their Tainan fabs. In January, CMO was the world’s fourth-largest producer of large-sized LCD panels, accounting for 13.3 percent of global unit shipments. HannStar was the seventh-largest producer, with a share of 3 percent.

It’s unclear whether operations at No.-3 supplier AU Optronics Corp. (AUO) have been affected by the earthquake. AUO of Taiwan in January accounted for 17.5 percent of global shipments.

“The Taiwan earthquake could have strong impact globally on large-sized LCD panel supply, depending on how quickly production is resumed at the Tainan facilities,” said Sweta Dash, senior director of LCD research at iSuppli. “After a shutdown, it typically takes 12 to 24 hours before production can be restarted at an LCD manufacturing fab. However, if there is damage to the equipment, the shutdown will last for a longer period of time. The results of the damage inspections by CMO and HannStar will be critical to determining whether production will be halted at their facilities for a longer period of time.”

If the halt in production continues, the global LCD market could face shortages of large-sized panels. CMO produces all sizes of LCD panels used for televisions, desktop PC monitors and notebook PCs. HannStar, which focuses on displays for netbooks and monitors, also produces small-sized panels.

The production disruption comes at a time when shipments are typically slow, supply is starting to exceed demand and inventories are increasing in the retail channels due to slower than expected sales in January and February. iSuppli’s forecast issued before the earthquake predicted that global shipments of large-sized LCD panels would decline 5.5 percent in the first quarter compared to the fourth quarter of 2009.

The earthquake also has halted Tainan’s production of glass, the main component used to make LCD panels.

Avanstrate, a small supplier that accounts for about 5 percent of global glass supply, operates five glass melting tanks in Tainan. Initial reports indicate severe damage at one of the company’s tanks.

Leading global LCD glass supplier Corning said there was no damage to its Tainan LCD glass operations and that all glass-making operations recovered within hours and now are running normally.

iSuppli