Devices are getting smaller and converging, thanks to tablet and smartphone improvements (cf. the upcoming Smith MarketWatch Quarterly for in depth analysis). However, there's a sticky question that has been looming since the mass adoption of Apple's iPad last year: Will people's love of tablets, and increasingly powerful smartphones (like the new Motorola Atrix), lead to trouble for the semiconductor industry as some devices become less in demand or obsolesce?
As smart gets smarter and smaller, people (from general consumers to business users alike) are demanding more and more of these fewer devices. This demand is high for functionality, performance, and power consumption, among other features.
For the panel sector, this type of demand has been good news. Demand for larger, 42" LCD TVs was strong rounding out 4Q10 due to price competition. Price stability and positive demand has evened, providing good visibility across the supply chain. According to DisplaySearch's latest market review here, the developed markets (Japan, North America and Western Europe) had improved shipment growth favoring plasma as well as LCD increases.
It is the mobile phone display sector that is really seeing a boom though. As both DisplaySearch here and Barclays Capital (Technology report for 2/14/11) recently reported, the average selling price (ASP) for mobile phone displays continues to rise on a year-over-year (YoY) basis (though not quarter-over-quarter (QoQ)), leading to an overall upward trending. This upward trending is due not only to volume demand for this booming sector, but more importantly due to increases in display quality and functionality (resolution, touch screen, power efficiency, AMOLED, LTPS TFT LCDs, etc.). As a result of these market improvements (revenues are up roughly 13% QoQ, shipments are also up 6% QoQ see the DisplaySearch report here), CAPEX investment forecasts are improved by 5-10% for 2011 over earlier forecasts, according to the Barclays Capital report (2/14/11, p.4).
Smaller displays are seeing the greatest improvements (that is, unit demand, revenue and higher resolution and features) due to demand from CE and enterprise consumers. While devices are converging, they are also improving in component quality which is leading to margin improvements for many.
For the full review of the impacts of device convergence on the semiconductor and electronics industry as well as how key components are faring and forecasting, watch for our next MarketWatch Quarterly's dive into these important questions (due out in mid-March for subscribers (free subscription here) and late March to the general public).