Tablet demand threatens display supply chain

13 Jan 2011

The tablet computer gold rush has begun as rival manufacturers rush to compete with Apple’s iPad via rival operating systems, like Windows and Android. This is putting pressure on display manufacturers to keep up.

According to IHS iSuppli, global tablet shipments are expected to more than triple in 2011, rising to 57.6m units, up from 17.1m in 2010.

Although Apple will retain market dominance with 70.4pc share of tablet shipments next year, the company will face mounting competition from new rivals producing consumption tablets, including Samsung Electronics Co. Ltd., Hewlett-Packard, Research in Motion, Dell and dozens of other companies. But for now, Apple is expected to dominate tablet sales for the next two years.

“IHS believes that as these iPad competitors turn their focus to tablets, the demand for netbook and notebook displays will soften,” said Joe Abelson, vice-president of displays at IHS.

“And because the tablet market is so new and volumes are unpredictable, display suppliers will be forced to gamble production capacity on the unrealistically high projections of their tablet customers.

“With different panel sizes and specs in play, the industry should expect to see significant inventory shortages and excesses to occur at the SKU level throughout 2011, potentially accompanied by heavy discounting or scrapping of unused displays,” Abelson said.

Such disruption should not come as a surprise given the revolutionary impact of the iPad on the global technology market. Not since the dawn of television in the 1950s has another electronic device so effortlessly captured the hearts, minds and discretionary spending of so many consumers.

The tablet form factor once was dismissed by pundits as passing fancy and earlier models failed to garner interest among consumers. But the iPad changed everything. And now the device, along with other tablets, are lining up as standard equipment for virtually any application, from education and healthcare, to government and the military, to retail sales and, of course, the living room.

Other display trends for 2011

While the tablet faceoff will dominate much attention in 2011, IHS iSuppli forecasts indicate this year also will bring a breakthrough in the manufacturing of active-matrix organic light emitting diode (AMOLED) displays.

Massive investments in new materials, processes and production capacity will enable Samsung — currently the only major supplier of AMOLEDs — as well as LG and perhaps one or two other display companies, to drive AMOLED penetration deeper into mobile devices. This may also be the year when premium AMOLED televisions move beyond trade shows and onto retail shelves.

Another notable trend in 2011 will be the emergence of 3D capability as a standard feature for higher-end televisions. In 2010, 3D was the buzz for every television manufacturer and media outlet. But all the hype couldn’t overcome the fact that first-generation 3D TVs were unpleasant to watch — assuming viewers could find any 3D content to watch.

In 2011, 3D capability will be added to the checklist for many high-end models, as TV brands have made it their mission to proliferate this technology to more consumers, even at the cost of quality of presentation.

While this may lead to some near-term success, these brands may be risking long-term customer loyalty, especially if early adopters learn in a year or two that their investments are obsolete because vastly improved technology has been released, such as glasses-free 3D or projected 3D.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years