DisplaySearch Reports Q2’06 10”+ LCD Revenues Rose 23% On 55% Area Growth; Korean Suppliers Regain The Lead In Sales

August 30, 2006

DisplaySearch, the worldwide leader in display market research and consulting and part of The NPD Group, has released the Q3’06 Large-Area TFT LCD Shipment Report database indicating that Q2’06 worldwide shipments of large-area (10”+) TFT LCD modules rose 28% Y/Y as expected, resulting in 23% revenue growth to $11.8B. Unit growth exceeded revenue growth because average unit price declined 4% Y/Y to $184. The effect of this price decrease was compounded by a 21% Y/Y increase in average display area. Display area shipments increased 55% Y/Y to 7.35M m” (more than enough to cover 980 soccer fields). The average price per square meter of display declined 21% Y/Y to $1605, which was in-line with the long-term trend. DisplaySearch see prices rising for notebook PC and monitor displays in Q3’06, but prices for TV panels will continue falling. Most suppliers will therefore remain under margin pressure in Q3’06, but less so than in 1H’06. Suppliers are increasing capacity utilization, and their financial results should improve through the year. Korean suppliers (LG.Philips LCD and Samsung Electronics including S-LCD, the Sony joint venture) increased their display area shipments 58% Y/Y in Q2’06. These two suppliers delivered 54% of all LCD TV area in Q2’06, which helped them capture 46% of all large LCD revenues. Taiwanese suppliers had taken the lead in Q1’06 for the first time, but new fabrication plants coming on-line in Korea put the Taiwanese back in second place with a 41% revenue share. Supplier shipment targets indicate that Korean producers will retain the sales lead in 2H’06. In terms of shipments, trends and market share by application: --Notebook PC panel shipments fell 2% Q/Q while rising 30% Y/Y to 18.1M units as demand weakened from Q1’06. A similar seasonal pattern occurred in 2004. Q2’06 shipments were 5% below the DisplaySearch forecast and 10% below supplier targets. The average unit price fell 17% from Q1’06 to $113. The 17% quarterly price decline applied to both traditional formats (e.g. XGA or SXGA) and to wide formats, because the areal price premium for wide-format panels has declined to zero. Revenues from notebook panels were down 19% Q/Q to $2.0B, but up 9% Y/Y. The 15.4” wide-format (1280 ◊ 800) panel continues to be the top-selling type for notebook PC applications. It generated sales of $706M in Q2’06, making it the fourth-highest revenue generator of all large-area panels. The 15” XGA panel remained the second-place revenue generator in the notebook PC market, but its share declined from 16% in Q1’06 to 13% in Q2’06. Going forward, DisplaySearch expects the third-place 14.1” wide-format (1280 ◊ 800) panel to capture second-place in revenues from the 15” standard aspect ratio panel in 2H’06. Korean suppliers captured 49% of notebook PC display revenue in Q2’06. LG.Philips LCD became the #1 supplier with a 25% sales share. Samsung Electronics fell to #2 and AU Optronics remained #3. However, the combined share of AU Optronics and Quanta Display, which are expected to merge in Q4’06, would have made them #1 with a 26% share. --LCD monitor display shipments fell to 31.8M units with the weakest seasonal-demand pattern since 2001. This was 4% below the DisplaySearch forecast and 12% below supplier targets for Q2’06. Unit shipments were up 6% Q/Q and 12% Y/Y, but average prices fell 18% Q/Q and 26% Y/Y to $131. The average wide-format monitor panel price was 52% higher than the traditional aspect ratio, because wide panels are generally larger and still novel. Wide-format panels were only 10% of shipments in Q2’06, and DisplaySearch expects this price premium to decline as shipments increase. Monitor panel revenues declined 13% Q/Q and 17% Y/Y to $4.2B in Q2’06. The 17” and 19” SXGA panel types were the second- and third-highest revenue generators among all large-area panels in Q2’06. They generated 41% and 30% of monitor panel revenues, respectively. The venerable 15” XGA panel generated 9% of revenues, but the new 19” Wide (1440 ◊ 900) panel will most likely capture the third-place position in 2H’06. Samsung Electronics was the top supplier of monitor panels in Q2’06 with a 22% revenue share. AU Optronics (separate from Quanta Display) was #2 and LG.Philips LCD was #3. Chi Mei Optronics was #4 with a 12% share, and Chunghwa Picture Tubes was #5 with an 11% share for the quarter. Taiwanese suppliers led this market with a 54% sales share. --LCD TV module shipments rose to 11.9M units, which was 6% above the DisplaySearch forecast but 18% below supplier targets for Q2’06. Shipments rose 6% Q/Q and 99% Y/Y despite seasonally weak TV set demand, as distribution channels began gearing up for holiday season sales. This bodes well for LCD TV demand and confirms that the excess inventory build up in 1H’06 has largely been worked out. The average TV display area increased 36% from Q2’05 and 9% from Q1’06, which raised the average unit price 12% Y/Y. The average price per square meter of TV display was down 18% Y/Y, and area shipments were up 171% Y/Y to generate revenues of $5.2B. Sales were up only 2% Q/Q, but 122% Y/Y, as the average price per square meter fell 12% from Q1’06. The 32” HDTV (1366 ◊ 768) panel became the top grossing large panel in all applications for Q2’06 with a 15% share of the entire large-area market and a 35% share of TV display sales. 40” and 37” were the second- and third-highest grossing TV sizes with 6% and 5% shares, respectively. Samsung and its S-LCD joint venture were the leading source of TV modules in Q2’06 with a 32% revenue share. LG.Philips LCD was #2 with a 23% share and AU Optronics was #3 with a 14% share. Chi Mei Optoelectronics was #4 with a 12% share, slightly ahead of #5 Sharp of Japan. Korean suppliers captured 55% of TV module revenues. Q1’06 – Q2’06 Large-Area Output Share and Growth Supplier Rank Q1’06 Display Area Share Q2’06 Display Area Share Q2'06 Q/Q Area Growth Samsung 1 22.1% 24.5% 20% LPL 2 19.0% 20.0% 14% AUO 3 15.4% 15.1% 7% CMO 4 12.7% 11.3% -3% CPT 5 6.9% 7.1% 11% Others 23.8% 22.0% 0% Total 100.0% 100.0% 9% For more information on the Quarterly Large-Area TFT LCD Shipment Report, please contact Richard Goldman at (312) 952-5679 or richard@displaysearch.com . DisplaySearch will be displaying all its reports at the upcoming 2006 China FPD International Conference in Shanghai from September 7-8. More information on the China FPD Conference is available at www.displaysearch.com/chinafpd. About DisplaySearch DisplaySearch, an NPD Group company, has a core team of 36 employees located in North America and Asia who produce high-value, FPD-related market forecasts, technology assessments, surveys, studies and analyses. The company also organizes influential events worldwide. Headquartered in Austin, Texas, DisplaySearch has regional operations in Chicago, Houston, Kyoto, San Diego, San Jose, Seoul, Shenzhen, Taipei and Tokyo. Learn more about the company through the internet at www.displaysearch.com . About The NPD Group Inc. Since 1967, The NPD Group has provided reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,400 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competitors. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys, video games, and wireless. For more information, visit www.npd.com

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