In the face of a competitive onslaught from foreign rivals, Japan’s flat-panel display (FPD) manufacturing equipment makers have held their own, retaining more than half of the market.
Japanese suppliers accounted for more than 50 percent of global FPD equipment revenue over the three year period of 2017 through 2019, according to IHS Markit | Technology, now a part of Informa Tech. In comparison, South Korean firms held about a 25 percent share, while suppliers from the United States and other regions accounted for the remaining revenue.
Japan has managed to maintain its leadership in critical equipment used to make FPDs, despite the fact that the country is no longer a major player in the production of displays. Japan in 2019 accounted for just 5 percent of global FPD capacity, down from 22 percent in 2004, as reported by the IHS Markit | Technology AMOLED and LCD Supply Demand & Equipment Intelligence Service.
“Starting in the 1990s, FPD manufacturing technology blossomed in Japan, with domestic electronics firms collaborating closely with local equipment and materials makers to create a highly Japanese-centric supply chain,” said Charles Annis, senior director at IHS Markit | Technology. “This supply chain has proved remarkably robust over the decades, enabling the rapid growth of the FPD industry in Japan and elsewhere. Even as Japan’s share of panel production has dwindled, the country has been able to maintain a strong position in the FPD manufacturing equipment segment.”
Driven by the technology shift from LCD to OLED and the great China FPD capacity build-out, FPD equipment sales reached an unprecedented three-year total of $54.3 billion between 2017 through 2019. This generated high revenues for equipment makers in all regions, benefiting most companies throughout the supply chain.
Korea leverages OLED technology
Japan’s FPD equipment leadership has been contested in recent years by South Korean firms leveraging their relationships with Korean panel makers and their dominant positions in the organic light emitting diode (OLED) display market.
As Korea’s LG Display and Samsung Electronics became FPD market leaders both in terms of capacity and technology, the companies began to pioneer high volume OLED manufacturing. To accomplish this, they redoubled their efforts to localize production of equipment and materials. Localization typically reduces costs, allows faster responses to issues and increases the ability to have suppliers develop specific technologies.
“Korean equipment companies have been highly successful in a wide variety of FPD equipment segments, particularly those specific to OLED production,” Annis said. “Even so, Japanese equipment companies have continued to generate higher total revenues due to very strong positions in multiple high cost and critical segments such as photolithography and evaporation.”
Japan maintains photolithography and evaporation leadership
The photolithography and evaporation segments represent a major portion of the FPD equipment business, accounting for about 20 percent of total market revenue.
Japan’s Canon and Nikon accounted for almost 98 percent of the array and touch on thin film encapsulation (TFE) photolithography market for the three years from 2017 to 2019. Canon Tokki accounted for 55 percent and ULVAC had 11 percent of the evaporation market during the same period.
Furthermore, Japanese equipment companies that supplied Sharp’s Gen 10 fab starting in 2008 are positioned to win business in the current G10.5 expansion wave in China.
Korea makes OLED gains
Korean equipment company revenue share was higher in 2016 and 2017 due to the build-out of new flexible OLED factories at both Samsung and LG Display.
Companies in the region have taken leadership positions in the key market for excimer laser annealing (ELA). ELA requires significantly higher equipment intensity and increased average selling prices for OLED displays than for LTPS LCDs. Korea’s AP Systems accounted for 60 percent of the ELA market, while all Korean makers collectively commanded 74 percent of the market between 2017 and 2019.
In the wet etch segment, Korean firms DMS, KCTech and SEMES accounted for 73 percent of the market over the same time period. On a unit and total-available-market basis, Korean equipment makers’ share is relatively higher.
Applied Materials dominates CVD
The FPD equipment market is Asia-centric, but U.S.-based firms and companies in other regions also contribute substantially. Principally, U.S.-based Applied Materials accounted for 84 percent of chemical vapor deposition (CVD) revenues over the three year period between 2017 through 2019. High value-added CVD vacuum equipment is used in multiple applications for array, barrier, thin-film encapsulation and touch on TFE. As a result, CVD is one of the largest FPD equipment segments and was valued at more than $4.5 billion between 2017 and 2019.
FPD equipment market faces bumpy outlook
While the FPD equipment business has enjoyed robust growth in recent years, the market now is facing new challenges. Many manufacturers are struggling to ramp production of new flexible OLED factories. Additionally, many top tier LCD makers are having to restructure their manufacturing operations to absorb excessive television capacity.
Due to these trends, the FPD equipment market is forecast to decline 29 percent to a total of $38.6 billion over the next three years.
“In a declining market, the competition to win limited business will only intensify,” Annis said. “Japan’s strong position in FPD equipment will face growing pressure as Chinese investments in Gen 10.5 fabs slow and the market continues to shift toward OLED. In addition, the Chinese government now is aggressively encouraging equipment localization with a variety of support mechanisms. This represents a growing concern for Japanese, Korean and Western equipment makers alike.”
The AMOLED and LCD Supply Demand & Equipment Intelligence Service
The AMOLED and LCD Supply Demand & Equipment Intelligence Service from IHS Markit | Technology provides a comprehensive guide to fab activity, capacity, utilization, supply/demand, capital spending, financial information and relevant news analysis for the entire FPD supply chain.