Display driver IC market peaked in 2010

Global display driver integrated circuit (DDIC) revenue looks set to rise by a double-digit percentage in 2010 iSuppli said.

That’s up from the steep losses this sector has made during the last two years. However, that’s where the good news ends – the long-term outlook for the industry remains pessimistic in the face of continued technological developments.

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 also grow at a corresponding rate, expected to reach 9.8 billion units by the time the year finishes. This brings the figure up almost 18 percent from 8.2 billion units last year. Altogether, the numbers this year mark a strong upturn for DDIC following a disastrous 2009, when industry revenue contracted by nearly 15 percent from the year earlier.

This year’s short recovery looks to be the only high for a while, with iSuppli predicting that revenue will fall continuously during the next four years. By 2014, DDIC revenue will stand at $4.7 billion, which is nearly a third off the 2010 level and amounts to a five-year compound annual growth rate (CAGR) of negative 3.8 percent.

“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.”

Lawson said that 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.

This is because growth in DDIC unit shipments will be offset by the evolution of more cost-effective and power-efficient technologies in panels.

One of these new things is an 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.

Because fewer chips will be needed, IC growth potential for DDIC within the large-panel LCD markets, is therefore reduced, the company said.

And there’s worse to come. As this year draws to a close, high stock levels 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 uncertainties in trade within Europe. Also, 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 said it expects to see driver IC unit shipments fall by as much as eight percent during the following two quarters, with revenue by year-end sliding by 12 percent compared to the first half.