LCDs may be encased in glass but that doesn't mean the
market outlook for such devices is crystal clear. To the
contrary, the crisper, sharper images flashed by advancing
liquid crystal display (LCD) technology doesn't transfer easily
into assessments of the market.
Analysts paint a medium-term picture for LCDs that is
muddied by a number of contradictory signals ranging from lower
revenue and a maturing market on one hand, to trends promising
strong growth on the other.
Questions remain regarding whether producers of indium,
which is essential to LCDmanufacture, can continue to
capitalize on opportunities and how the metal may be impacted
by the less-positive trends marking the current LCD market.
LCD desktop monitors count as one segment of the market that
is already mature, according to Paul Semenza, senior vice
president of Austin, Texas-based research and consulting firm
Another sector approaching maturity is the sleek LCD TV
segment, which continues to displace bulkier, space-consuming
cathode ray tube (CRT) models. Small to medium-size LCDs can
expect strong growth in the next few years, he said.
Semenza is less bullish on the overall revenue outlook for
LCDs. He sees a dramatic slowdown in growth this year as prices
decline due to economic softness and oversupply.
At the same time, Semenza expects plenty of positive
developments, including continued growth for LCD notebook PCs
and new applications in digital signage, a form of electronic
display that is just now emerging and expanding rapidly. Add to
that a general trend toward larger LCDs with heftier per-unit
"We've actually seen quite a bit of growth in 40-inch-plus
TVs over the last year and a half," said Paul Gagnon,
DisplaySearch's North American TV market research director.
Fast forwarding to 2012, Gagnon expects about 35 percent of all
LCD TV shipments to be bigger than 40 inches vs. only a
half-percent share in 2004. The reason? Many LCD producers
hadn't yet built the factories that could accommodate the large
slices of glass used to produce the TVs. The shift occurred in
2006, when factories began specifically targeting 40-inch-plus
screen sizes, DisplaySearch says.
"Perhaps the best news for material providers is that the
area (size-wise) of displays produced is forecast to continue
to grow rapidly for the next several years," Semenza said.
"This is mainly a supply-side phenomenon, as TFT-LCD
manufacturers continue to invest in ever-larger capacity
This should be a reason for suppliers of the indium-tin
oxide coatings used in making LCDs to celebrate-except that the
slower LCD revenue growth Semenza expects for the near term
could dampen revenue on the indium-tin oxide (ITO) side. The
fact that revenue growth is significantly slower means that
there will be intense pressure to lower the per-area cost of
displays, which means material suppliers also would need to
"Right now we happen to be in a down cycle when the global
economy is having a lot of problems," Gagnon said. He expects
panel makers' profits and prices to experience some recovery by
the end of 2009, when the current downturn goes into the
"crystal cycle," an industry term for the erratic investment
and growth pattern that has impacted LCD panel makers'
Gagnon pegs LCD TV growth at about 186 million units
annually in 2012, up 75 percent from about 106 million units in
"The demand for LCD TVs is still peaking," said Abhigyan
Sengupta, display analyst at San Antonio, Texas-based
consulting firm Frost & Sullivan. "And the prices of LCDs
have also fallen. TVs, PCs, laptops-they have all become
more-or-less necessary commodities."
As LCD TV prices slide, those sets become increasingly
available to emerging markets like Brazil and other parts of
Latin America, China and India, Gagnon and Sengupta both noted.
LCD TV shipments to China could reach nearly 34 million units
by 2012 vs. just shy of 9 million units in 2007, Gagnon
A cooling in the growth rate of the LCD TV market opens the
door to potential contenders, which could spell a reduction in
indium-tin oxide use in the flat panel market, some analysts
say. Competing technologies include electronic paper (e-paper)
and organic light emitting diodes (OLEDs), which is "much,
much, much, better than the LCD picture quality," Sengupta
OLEDs are used mostly in mobile phones and personal digital
assistants (PDAs), he said, adding that both e-paper and OLED
displays are thin and flexible partly because they don't
require backlights like LCDs. Instead, they emit their own
"It's not completely true that you don't need a transparent
electrode. Actually, you don't need it on both sides of the
display because you don't have a backlight, so you don't need
the conductive coating," explained Lawrence Gasman, principal
analyst at Glen Allen, Va.-based technology research firm
NanoMarkets LC. "You just need it on the front.
"I suppose if we were to move to OLED it would certainly cut
ITO demand by half," he said. "Getting rid of the backlight is
certainly interesting in terms of ITO."
Gasman believes that LCDs are "running out of steam" because
manufacturers are close to pushing beyond the upper limits of
the capabilities of their production facilities.
Meanwhile, Gagnon believes that the OLED TV still needs to
muster broader support from TV manufacturers before it can
flourish. OLED prices are too high for the mass market, he
adds, predicting the technology will probably account for only
1 percent of the TV market share by 2012.
Indium-tin oxide may be the current "king" in the high-end
conductive coating market, but LCD producers have never been
completely happy with it, Gasman said. He likens indium, which
enjoyed a peak in demand in the 1960s and '70s for use in
nuclear power plants, to "marrying someone because he's the
only guy around." ANDREA NIEM