iPhone challengers boost display demand, despite market declines

"The continued success of Apple Inc's iPhone is driving market demand for competitive products," said Vinita Jakhanwal, principal analyst for small and medium displays at iSuppli.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 8/12/2009

Despite the estimated decline in the overall mobile-phone display market this year, iSuppli Corp has reported that the new generation of so-called “iPhone killers” is set to drive demand and increase sales of displays commonly used in smart phones in 2009.

According to the market research company's report, worldwide shipments of mobile-phone LCD displays between 2.5 inches and 4.9 inches in size diagonally, and with pixel formats of QVGA and higher, are projected to rise to 149.9 million units in 2009, up 22.1% from 122.8 million units in 2008. Meanwhile, overall shipments of all mobile phone displays are expected to decline by 11% for the year.

While a large number of smart phones use smaller displays and LCDs with other pixel formats, these displays are most likely to be used in high-end, feature-rich products, iSuppli said, further explaining that their growth provides an accurate picture of growth in smart-phone display demand.

“The continued success of Apple Inc’s iPhone is driving market demand for competitive products,” said Vinita Jakhanwal, principal analyst for small and medium displays at iSuppli, in a statement today. “Companies are rolling out a range of iPhone killers, including new products based on Google’s Android operating system. To this end, many OEMs are introducing higher-end, multimedia-enabled phones that include larger displays with superior resolutions.”

ISuppli noted the rising demand for smart-phone-oriented displays and the continued strength in demand from the Chinese mobile phone makers as helping propel a recovery in the mobile phone display market. According to iSuppli data, sequential growth started in Q2, after overall shipments declines sequentially by 17.4% in Q4 2008 and by 8.5% in Q1.

Further, iSuppli noted that in Q2 shipments slowed in May compared to April due to a shortage of components such as driver ICs and LCD glass. The company reported that most of this shortage, particularly for driver ICs, was resolved by June, allowing mobile-phone display shipments to rise by 4.6% in Q2.

“Early indicators from the Taiwanese small/medium suppliers are pointing to a strong third-quarter performance,” Jakhanwal said. “The Taiwanese vendors are significant suppliers to the Chinese mobile phone makers for both the branded and clone markets. Incentives from the Chinese government have helped boost demand for consumer electronics, including cell phones, in rural China. The government is looking at expanding this program further.”

ISuppli reminded that Q3 is usually the strongest period of the year, as panels are shipped to meet the end-year holiday demand for electronic devices and said that strong demand is also expected from tier-1 handset OEMs in this quarter. However, uncertainty in consumer demand persists. If mobile-phone sales fail to pick up Q4, oversupply in the mobile phone display market could build up, the market research company warned.