The supply of 11.3in and 12.1in active-matrix screens will remain tight through 1996, due to a massive ramp-up of notebook production coupled with increasing demand for large screens, analysts and industry officials say.
"At the earliest, supply constraints will ease up by later this year but there is a chance that shortages will extend to early next year, between January and March," says Hiroyuki Yoshida, an analyst at Yano Research in Tokyo.
Although Japanese thin film transistor (TFT) LCD makers are increasing production to meet high demand for their screens, fears of re-creating the recent oversupply situation of 10.4in screens will probably keep the expansion gradual, analysts say. "We've just come through a period where people were caught with an oversupply and falling prices," says Steven Myers an analyst at the Tokyo branch of Jardine Fleming Securities. "That's dampened everyone's enthusiasm to invest in the area."
This lack of enthusiasm couldn't come at a worse time for PC notebook makers. Hoping to challenge Toshiba's dominance in the notebook market, both Compaq and IBM in recent months have revamped their product lines and are rapidly boosting production volumes. Analysts expect by year end these increases coupled with the entrance of new notebook players -- particularly Hitachi and Fujitsu -- will bring a huge supply of notebooks into the market.
Increased notebook production will be in full swing by the fourth quarter, but at that point it will be anyone's guess whether or not there will be a market glut or shortage, says Kimball Brown, vice-president, desktop and mobile PCs at market researcher Dataquest. Current screen shortages in part stem from difficulties in changing production to larger form-factor screens, analysts say. Most notebook screen makers use equipment that yields four 10.4in units from one mother glass at a time. When used for creating larger screens, the equipment yields only two screens per glass, they say.
"Our supply situation for larger screens is very tight," says an official at Hitachi, which supplies screens to Compaq and others.
Even suppliers that have made quick transitions to using larger mother glass are turning away customers. For example, following its June expansion, a joint venture between IBM and Toshiba called Display Technologies (DTI) began pumping out 400,000 screens per month. Eighty percent of the units are 12.1in screens, says a spokesman for the company, but DTI still has trouble meeting demand.
"We can only satisfy half of the demand for screens. Notebook PC makers want 12.1in screens but the supply can't handle it," says a spokesman for DTI.