For a long time, automotive display market has been dominated by Japanese suppliers. The three Japanese panel suppliers, Japan Display, Sharp and Kyocera Display, have accounted for over 50% of all LCDs used in before-market (original equipment) automotive displays in the last 3 years. However, recently we are seeing some quick market share gains from Taiwanese panel suppliers, who accounted for around 30% market share in 2013, a 10 percentage point gain from 2011.
From the table below, which indicates the supply chain relationship between the top 5 automotive display suppliers and before market tier one system makers in 2013, JDI has the widest range of customer base, while Sharp has the deepest relationship with top 5 tier one customers. However, after several years of development, AUO and Innolux have successfully made inroads into the supply chain of many Tier 1 system integrators.
AUO is the major supplier of center stack display LCDs to Alpine and Clarion and also have a good relationship with the top 3 tier one system integrators, namely Continental, Panasonic and Bosch. AUO’s in-house touch panel solutions for center stack displays use is gradually gaining market and AUO has plans to ship Head UP Displays (HUD) next year. Innolux, thanks to a strong team from TPO Display, has a wide range of customers like JDI and has strong relationship with several tier I auto makers like BMW, Porsche, etc. Innolux is also the single source supplier of the 17-inch panel used in the premium media control unit of the Tesla Model S. The glass/glass (G/G) type touch panel in the above module is supplied by TPK.
The two top Taiwanese panel suppliers, Innolux and AUO, are both increasing their shipments to Chinese Automotive OEMs, thanks to the announcement of “three guarantees” policy (Provisions on the Liability for the Repair, Replacement and Return of Household Automotive Products) in China, as both companies are able to provide good quality and reasonably priced automotive panels.
The increasing attach rate of automotive displays has helped Taiwanese panel suppliers to see a surge in their shipments to this market. Cars are becoming “smart” devices, increasing the use of automotive electronics which in turn increases the demand for automotive display panel. In order to reduce bundling costs of automotive displays, the design of automotive display panels is gradually moving from high priced customized products to middle-end commodity like products. Taiwanese display suppliers have a strong capability in manufacturing commodity type panels with good quality. Also, Taiwanese panel suppliers have several Gen4 and Gen5 fab lines that are able to produce larger screen size panels at lower cost. Additionally, Taiwan is well-known for manufacturing electronic products. Taiwanese panel suppliers are able to take advantage of these points to enter the ever-growing automotive electronic supply chain.
However, at the same time the Taiwanese auto panel industry faces many challenges. The Japanese panel makers still dominate the display supply chain of the instrument cluster market, which has high barriers to entry. For example, the Tesla Model S 12.3-inch instrument cluster is still supplied by JDI. The lack of domestic brand auto makers in Taiwan makes it challenging for domestic panel makers to forge relationships and expand market presence in the automotive display industry. . Meanwhile, Korean suppliers are using the power of group companies to establish market presence. For example, LG Display plans to establish itself as one of the leading automotive panel suppliers in 2015 by bundling displays with in-house automotive electronic solution and component products from subsidiaries and sister companies, such as LG Electronics (LGE) for AVN (audio, video and navigation), LG Chem for battery, LG Innotek for motor and sensors. China-based suppliers, such as Truly, IVO, Tianma/NLT, are also already popular in aftermarket. BOE is trying to enter the market as well
The Automotive display market is forecast to grow rapidly over the next few years. It is still unclear which suppliers will emerge as long term Winners in this market. Making the right connections and providing committed long term quality in product and service plus ensuring availability of long term supply will be the key criteria for success instead of price competition. Taiwanese suppliers can capture the growth opportunities by ensuring they have a long-term comprehensive business strategy and efficient execution in order to compete with the fierce competition from Japanese, Korean and even the upcoming Chinese makers.
Table 1: Automotive Display Market Supply Chain Grid 2013
Note: the darker the circle, the stronger the relationship is. For shipments of CID and CSD only