October 30, 2012 - This year is shaping up to be a historically lousy year for makers of flat-panel display (FPD) manufacturing equipment, but expectations are looking up that demand will catch up to supply in 2013 and balance the market, according to NPD DisplaySearch projections. Spending on FPD equipment is projected to plummet -69% in 2012 to $3.8 billion, making it the worst year in the sector's history. But even with slow demand growth in maturing markets (TVs and PCs), the firm sees "significantly improved conditions" in 2013, more than doubling to $8.3B.

Most of that spending will be for new low-temperature polysilicon (LTPS) fabs or converting existing amorphous silicon (a-Si) capacity to LTPS, both for use in TFT-LCD and active-matrix OLED (AMOLED) production, explains Charles Annis, VP of manufacturing research at NPD DisplaySearch. "One reason spending is increasing so much is because LTPS fabs cost substantially more than a-Si fabs to build. There are extra process necessitate more than 10 mask steps." LTPS fabs also require higher-priced equipment, particularly high-resolution photolithography tools, he added, but having those technologies does enable production of high-value displays used in smartphones and tablets.

FPD equipment spending forecast. (Source: NPD DisplaySearch)

Such dramatic cutbacks in investment will more quickly rebalance supplies with demand and raise fab utilization rates. Meanwhile, new manufacturing technologies (oxide semiconductors, in-cell touch, flexible AMOLEDs and AMOLED TVs) promise lower costs and higher-value applications. Together that spells improve profitability for panel makers, notes Annis. Even with the cautionary disclaimer that new investments (e.g. AMOLED capacity) can be pushed out or cancelled if performance and cost targets don't materialize, most of the firm's indicators project 2013 "to be a much better year than 2012."