Korea-based Samsung is expected to come in as the biggest maker of large, high-quality liquid crystal displays (LCDs) in the fourth quarter of this year or the first quarter of next year, according to a market research firm. But Samsung's surge could go well beyond one company displacing another. As in the memory market in the early '90s, Samsung's surge could mark the end of Japanese hegemony, leading to more competition and price cuts.
Samsung will rank first in shipments of active-matrix LCD panels with a size of 10.4 inches or more, the largest segment of the market, according to analyst Hiroyuki Yoshida of International Data Corporation Japan.
Almost all notebook PCs today come with LCDs larger than 10.4 inches. The most popular screens today are 12.1, 13.3, or 14.1 inches from notebook PC vendors such as IBM, Dell Computer, Compaq Computer, and Gateway.
Moreover, the biggest displays, typically 15 inches and larger, are also gaining ground, albeit gradually, as replacements for the venerable CRT picture tube monitors found on desktops everywhere.
Samsung will bump Display Technologies Incorporated (DTI), a joint venture between IBM and Toshiba, out of the top spot, according to Yoshida.
"It will be close in the fourth quarter. Whether they can top DTI, I'm not sure. But in the first quarter of next year it's almost a certainty," he said. The company will be making close to 300,000 panels per month, he said.
But Samsung's speed at targeting a critical PC component market then building massive capacity is well-known. In the early '90s, Samsung blew past the Japanese and surprised many when it emerged as the largest supplier in the world of DRAM memory chips, which are used as the main memory in all PCs today.
The Japanese also have historically been leaders in the LCD market. But the makeup of the industry is beginning to change. Mentley says Samsung came into the market in earnest about three years ago and led prices downward quickly. "They definitely affected the market," he noted.
Moreover, some Japanese makers are pulling out of the LCD market for notebook PCs, according to Yoshida. For example, Sharp, which at one time was the undisputed LCD market leader, for the most part has retreated from notebooks. "They mostly target desktop monitors and non-PC applications now," he said. He added that NEC also recently made an announcement in Japan that it would no longer make 12.1-inch displays.
In addition to Samsung, Korea-based LG Electronics has emerged as major LCD supplier and Taiwan electronics giant Acer is building a plant to make LCDs with technology from IBM.
Though Acer is still an unknown quantity, Mentley said in general the thinking is "since [large Asian vendors] make so many notebook PCs, they might as well have vertically integrated supply." Other Taiwan-based vendors, in conjunction with Japanese companies such as Mitsubishi, are also planning factories.
But Mentley also warned that the market has teetered on the edge of a price meltdown over the last year or so because of oversupply in market segments. CRT monitor prices, for instance, have dropped to $100 for some 15-inch models, making them more attractive.
Becoming the largest supplier in a market like this, therefore, may not be such a good thing. Many makers "are backing away from capacity" right now, he said, hoping that prices will creep up more. Some industry sources claim that prices were below material costs this past summer.
Yoshida also cautioned that Samsung and Hyundai still face cash flow problems related to the Korean economic crisis but that they appear to be on track to weather it.