However, while equipment prices have fallen, material costs, which include the backlight, polarizers and so on, have not seen significant reductions. As a result, customers considering additional investment in larger fabs are being confronted with sizable material costs. "Equipment vendors are faced with the challenge of offsetting these high costs through their experience, process know-how and continuous technology improvements to benefit customers and thus the entire industry," notes the analyst of this research service. "This may include leveraging options that might offset the use of a particular material either partially or completely to control costs."
New Generation Fab Requirements Boosts Growth of Compatible Equipment
In keeping with the high adoption of flat panel in various applications, assemblers are increasing the capacities of existing facilities as well as in investing in new generation fabs. While the sale of generation 5 equipment peaked during 2003, 2006 saw the greater adoption of generation 6 equipment and also the setting up of generation 7 fabrication facilities. Hence, the adoption generation 7 and 7.5 panel sizes and fabs are expected to have a considerable impact on the growth of the LCD manufacturing equipment markets. Having said that, the sales of older generation equipment will not come to a standstill as smaller display sizes yet find application in equipment such as desktop monitors and cell phones. China is one area where small sized displays are manufactured and thereby will still see continued investment in older generation equipment.
Among the market segments, the LCD exposure equipment market remains the largest, but saw negative growth during 2006. However, as excess inventory levels fall, demand is expected to strengthen, leading to positive growth rates in 2008 and 2009. Similarly, the LCD sputtering equipment markets have been affected by the overcapacity situation prevailing in the entire LCD market. A decline in expansion plans and budget trimming on part of the panel manufacturers was the contributing factor to the market slump in the base year. The slump is likely to continue in 2007, but 2008 is expected to be the recovery year. "Overall, the LCD manufacturing equipment market is witnessing large scale consolidation owing to various strategic partnerships," says the analyst. "At the same time, there is also the emergence of smaller tiered companies due to encouragement by local governments to meet domestic requirements."
Flat Panel Displays (FPD): FPDs are a collective group of technologies for displaying video images on displays that are lighter and thinner than the traditional CRTs. LCD and PDP technologies contribute to over 90 percent of the FPD market. Liquid Crystal Displays (LCD): LCD is one of the most popular of FPD technologies and is the most widely used in the industry with TFT-LCDs dominating 95 per cent of the market. They are used in a variety of application such as notebook computers, monitors, LCD TVs, and mobile applications such as cell phones, PDAs, portable media players etc. LCD TV market is experiencing the most demand right now and with falling panel prices, this trend is expected to continue forward as well.
Chemical Vapor Deposition (CVD): CVD is a chemical deposition process wherein thin film silicon (amorphous silicon, a-Si) is deposited on the glass substrate. The wafer when subject to a precursor reacts and decomposes to form the desired deposit on the glass substrate. Plasma Enhanced CVD (PE-CVD): PE-CVD involves the decomposition of the precursor when subject to gas plasma for the deposition of silicon and pixel electrode (ITO) layers.
