變化中的觸控面板行業．KDB Daew

Touchscreen market to grow twofold by 2016
We remain optimistic about the growth of touchscreens for use in smartphones and tablet PCs. This year, we project shipments of smartphones and tablet PCs to reach 1.1bn units (+32% YoY), with shipment area expanding 39% YoY to 8,580km2. The smartphone- and tablet PC-use touchscreen market is forecast to jump 31% YoY to US$16.4bn, or W18tr. Traditional PC manufacturers are likely to adopt touchscreens full swing starting this year. Indeed, Intel made touchscreens a required specification for all 3rd generation Ultrabooks (to be released this year). We project the touchscreen market to grow at a CAGR of 104% until end-2016, as 40% of laptop computers (89mn units) and 39% of desktop computers (56mn units) are expected to adopt touchscreens.

Changing rules: Large players entering the touchscreen market
Up to this point, only small-to-medium enterprises have engaged in the touchscreen business. Touchscreens for smartphones and tablet PCs require customization, as: 1) their cover glass designs are unique, 2) they must feature cutouts for cameras and speakers, and 3) they must accommodate various bezel colors and logos. Indeed, this need to produce multiple items in small volumes made the touchscreen business optimal for small manufacturers. However, the market has recently experienced changes. Large panel makers, as well as LCD color filter producers, are entering the market due to: 1) their desire to find new growth drivers amid the LCD industry slowdown, 2) a surge in 10-inch-or-larger touchscreen demand, and 3) ongoing standardization efforts for touchscreens. In particular, standardization would be positive for big players with large production facilities, since it would enable the mass production of standardized products to bring down cost significantly.

Overweight; Top picks are Samsung SDI, ELK, and Melfas
Although the smartphone- and tablet PC-use touchscreen market is likely to grow, fierce competition should hamper margin improvement. We take note of potential growth for large-sized touchscreens (larger than laptop panels). In addition, we believe PDP lines could be converted to produce touchscreens. We maintain our Overweight rating on the display sector, and select as our top picks Samsung SDI, which is seeing its loss-making units turn around rapidly; ELK, which is a supplier for global PC makers; and Melfas, which is likely to expand its customer base and achieve ASP increases on larger TSPs.