Display driver IC market peaks in 2010

EL SEGUNDO, USA: Global display driver integrated circuit (DDIC) revenue will rise by a double-digit percentage in 2010, rebounding from steep losses during the last two years, but the long-term outlook for the industry remains pessimistic in the face of continued technological developments, warns display market research firm iSuppli, now part of IHS Inc.

Overcoming two successive years of decline, DDIC revenue is projected to hit $6.5 billion in 2010, up 14 percent from the 2009 low of $5.7 billion. Shipments will grow at a corresponding rate, expected to reach 9.8 billion units by the time the year finishes—up almost 18 percent from 8.2 billion units last year.

Altogether, the numbers this year mark a strong upturn for DDIC following a terrible 2009, when industry revenue contracted by nearly 15 percent from the year earlier.

Nonetheless, this year’s recovery likely will represent the high point for some time to come, especially as revenue is anticipated to decline continuously during the next four years. By 2014, DDIC revenue will stand at $4.7 billion—nearly a third off the 2010 level, equating to a five-year CAGR of negative 3.8 percent.

The figure shows iSuppli’s forecast of DDIC shipments and revenue from 2009 to 2014.Source: iSuppli, USA.

“As the semiconductors that provide voltage or current drive signaling to a pixel array for liquid-crystal display (LCD), organic light-emitting diode (OLED) or plasma technology, DDICs are used in a wide range of products that feature screens or panels,” said Randy Lawson, manager and principal analyst for display and consumer electronics at iSuppli.

“The broadest use of DDIC is in large-panel applications like LCD TVs, LCD monitors and notebook PCs. DDICs also are used in small-sized and medium-sized panel applications such as smart phones, portable navigation devices, portable media players, eBook readers and media tablets like Apple Inc.’s iPad.”

While large-panel applications account for the bulk of usage for DDIC, and although growth in LCD panel shipments is assured, both developments do not necessarily translate into a stable expansion for DDIC, iSuppli semiconductor research indicates.

To a significant degree, growth in DDIC unit shipments will be offset by the evolution of more cost-effective and power-efficient technologies in panels. A common trend will see the integration of more complex semiconductor functionality onto the LCD panel substrate, removing the need for some external, discrete gate driver chips, while simultaneously reducing the number of required column driver ICs per panel. And with fewer chips required, unit IC growth potential for DDIC within the large-panel LCD markets—the crux of the industry—is reduced.

As this year comes to a close, high inventories of LCD-TVs and notebook panels will act to further slow the market. The growing inventory backlog follows on the heels of weaker consumer confidence in the United States and ongoing uncertainties in trade within Europe.

In addition, wider economic concerns over 2010 holiday season orders, as well as fewer TV and monitor orders from the European Union early in the third quarter, have caused manufacturers to slash production for large-LCD panels that will ripple back into DDIC orders.

Owing to production cuts in the third quarter, iSuppli expects to see driver IC unit shipments decline by as much as 8 percent during the following two quarters, with revenue by year-end sliding by 12 percent compared to the first half.

Source: iSuppli, USA.