Competition among touch screen panel (TSP) manufacturers is showing signs of heating up, as more and more companies from not just Korea but also China jump into the market this year.
SMAC, a Korean company, increased its sales and improved its profitability last year. Its turnover and operating profits for last year reached 556.5 billion won (US$524.8 million) and 47.7 billion won (US$44.9 million) on a consolidated basis, with a rate of increase of 14.6 percent and 32.5 percent, respectively. The rapid growth can be attributed to the improved sensing of indium tin oxide (ITO) and a significant increase in production yield.
Synopex, in the meantime, could enhance its profitability in spite of a drop in annual sales. The total sales fell approximately 19 percent to 439.4 billion won (US$414.4 million), but the business profits jumped 185 percent to 8.4 billion won (US$7.9 million). The former is due to a drop in the unit price of third-generation PF1, or plastic film, touch screens, but as the total demand increased, more raw materials were replaced with non-imported ones, and the production yield was improved to offset the adverse factor.
ELK witnessed increasing business losses though. The company managed to increase its annual sales by 57.6 percent to 183.9 billion won (US$173.4 million) between 2012 and 2013, but the operating losses jumped six-fold to 36.3 billion won (US$34.2 million). The stabilization of the yield of the new fine pitch process, which is used to make TSPs thinner, was delayed to exacerbate the defect ratio.
Things are even worse for Melfas. Its operating losses amounted to 3.9 billion won (US$3.6 million) during the first three quarters of 2013, plummeting from the 23.8 billion won (US$22.4 million) of 2012. Although the profitability appears to have improved in the last quarter, the company is likely to remain in the red for the entire year of 2014. The new touch module product G1F enjoyed high popularity, but the low average selling price and production yield dragged down its profitability.
Digitech Systems is on the brink of insolvency due to its loan fraud allegations and conflicts surrounding corporate ownership. Its two plants in Paju, Gyeonggi Province have been shut down recently, with the company being on the verge of delisting following fraudulent accounting and false public announcements.
With the situation as it is, an increasing number of new players are joining the market. For example, IM, which developed its own touch panel last year by means of fluorine-doped tin oxide (FTO) and silver nano, is trying to achieve sizable sales this year by supplying the product to more clients. O-Film, the largest TSP manufacturer in China, is enhancing the scale of its business while refining its technology to have a great impact in the global markets, including Korea.
“The close competition will result in a sort of winnowing this year,” said a market watcher, adding, “However, even those companies that manage to survive will have to strive harder for competitiveness with Chinese rivals expanding their presence here.”