Originally Posted by specuvestor
This is actually non consensus but it looks pretty much what's happening past 18 months. If there's anymore LCD fab investment it would be in China.
It would be hard to find many that agree with us but I always look at actions rather than words. And their action is telling us LCD peak capex is over.
Here's another truth: The growth of the LCD / flat panel TV market has practically stalled. It's forecast for sub 10% for 2012 from a much-much-lower-than-expected 2011 number. The 8G fabs are not especially old and probably none of them are even running at capacity.
Throughout the growth phase of LCD (and even plasma) in the earlier part of the 2000s, everyone planned their fabs on the Field of Dreams model ("if you build it...") and the reality is they came, but never in the numbers to justify the amount of capacity that was built. Between upgrades and retrofits, you could easily satisfy the demand for all the world's LCD TVs and computer screens with the world's existing fabs.
We already know a huge chunk of mobile phone won't be LCD for much longer (and perhaps eventually few will; we'll see within 36 months how that plays out I'd guess). Global computer sales also appear to be in a permanent tapering off (and their monitors tend to be replaced even less often on the desktop at least). Tablets are growing like crazy, yes, but no one is constructing a new fab to support that market -- which is amazingly telling.
I posited in a post some weeks ago -- that a lot of OLED fans didn't like -- that under the most aggressive forecasts OLED could reach about 1/3 of the TV market by the end of the decade. Let's just pretend that against all rational odds, the TV market somehow expands from ~200 million now to ~300 million by decades end (it's actually hard to believe this will happen and I believe the TV market -- like the major-manufacturer / "first world" auto market -- is eventually going to stop growing entirely and fluctuate with economic growth, but let's go with it). The world's existing LCD capacity would meet all that demand.
If any Chinese fab were to be built by any new entrant or in a JV with an existing player and was 10G, it could literally produce more than 10% of the world's required output for 2020. Against that backdrop, and with Sony, Panasonic, Hitachi and Sharp all suffering under Korean competition, a strong yen, a terrible TV market, their own bad decision making, whatever, why would anyone invest in an LCD fab
? They are all sitting with "dry powder" and all of them are looking to find a TV product that is profitable; not the one they are currently making -- which is typically LCD
For various signaling reasons, I suppose the game of global flat-panel chicken starts with no one coming out and saying it, but really, I think they know what we believe: If OLED production doesn't hit snags and starts to ramp as LG and Samsung hope it does, the era of LCD fabs is over. The huge caveat is that if OLED production does begin to ramp and it becomes clear that it won't actually get cheaper than LCD, we will see LCD fab investment restart before mid-decade as Samsung and LG build 10G and finish off Japan for good.