TFT LCD Equipment Spending Approaches All Time High in 2010

Spending on TFT LCD manufacturing equipment is expected to surge from the recession-induced low of $7 billion in 2009 to approach previous cycle peaks with $13.2 billion in 2010. Amid sustained high factory utilization, LCD producers in Korea, Taiwan and China are expanding capacity or building new fabs on continuously improving demand expectations.

“The investment side of the Crystal Cycle has entered a kind of self accelerating phase,” stated Charles Annis, DisplaySearch Vice President of Manufacturing Research. “Most leading LCD panel makers are trying to pull in capacity expansions as fast as they can, and are competing to secure equipment orders. This should translate to a very healthy year for many equipment companies.”

Demand remained robust through 1Q10, due in part to strong demand from China before and during the Lunar New Year holiday and as LCD TVs rapidly displace CRTs in the high growth market. In turn, this helped sustain industry wide average fab utilization around 90 percent from 3Q09 through 1Q10. With fab utilization nearly maxed out, panel makers need to invest now in order to continue to increase output.

“Many of the expansions and new fabs being built this year will continue to install equipment well into 2011, but as all this capacity ramps to full production, demand will have to continue to grow at high rates or the industry could be setting itself up for the next major over-supply and down side of the Crystal Cycle in 2012,” Annis added.

Korea will account for the majority of equipment purchases in 2010. In 2011, the China capacity race is expected to really take off. The rapid growth of the China market creates a variety of both challenges and opportunities for capital equipment companies. The opportunity of an expanded customer base is attractive for all suppliers and in particular for Korean equipment companies that are very cost competitive.

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