2010 show driver IC sales growth but there are long-term concerns

According to iSuppli Corporation, the growth rate of global display driver IC (DDIC) sales in 2010 will reach double digits, reversing the decline in the previous two years, but the industry's long-term prospects will remain pessimistic due to technological development.

This year, display driver IC sales are expected to reach 6.5 billion U.S. dollars, up 14% from the 5.7 billion U.S. dollars in 2009, ending the two consecutive years of decline. Shipments will also grow accordingly. It is estimated that shipments will reach 9.8 billion at the end of the year, almost 18% more than last year's 8.2 billion. In short, these two data marks a strong rebound of the display driver IC following its extremely weak 2009. Last year, the industry's sales contracted by nearly 15% year-on-year.

However, this year's industry may reach the peak of a period of time in the future, in particular, it is expected that sales will continue to decline in the next four years. By 2014, display driver IC sales are expected to be $4.7 billion, almost one-third less than in 2010, and the five-year compound annual growth rate (CAGR) is minus 3.8%. Figure 1 shows iSuppli's forecast for 2009-2014 display driver IC shipments and sales.

The display driver ICs provide voltage or current drive signals for pixel arrays of liquid crystal, OLED, and plasma technologies for use in a variety of products that use displays or panels. The most widely used areas are large panel products such as LCD TVs, LCD monitors and notebook computers. Display driver ICs are also used in small and medium-sized panel products such as mobile phones, portable navigation devices, portable media players, e-book readers, and media tablet computers, such as Apple's iPad.

iSuppli's semiconductor research shows that although large panel applications account for the majority of display driver IC consumption, and LCD panel shipment growth will not be a problem, this does not necessarily ensure the stability of the display driver IC industry.

To a large extent, the panel's use of more cost-effective and more energy-efficient technologies will erode the growth of display driver IC unit shipments. More complex semiconductor functions will be integrated on the LCD panel substrate, eliminating the need for some external partial gate driver chips and significantly reducing the number of column driver ICs required for each panel. With the reduction in the number of chips required, the growth rate of IC unit shipments in the large panel LCD market, the core of the display driver IC industry, will decrease.

With the end of the year, inventory of LCD TVs and notebook PCs is at a high level, which will further reduce the growth rate of the display driver IC industry. U.S. consumer confidence is low, and trade conditions in the European region are still facing uncertainty, leading to an increase in inventories. In addition, the 2010 holiday sales season order situation is worrying, and the European Union's TV and monitor orders at the beginning of the third quarter decreased, prompting manufacturers to reduce the production of large LCD panels, which will in turn affect display driver IC orders.

iSuppli Corp. predicts that due to the declining production in the third quarter, the output of driver ICs will show a drop of up to 8% in the next two quarters, and the year-end sales will be reduced by 12% from the first half of the year.