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After two years of unprecedented capacity expansion, South Korean flat panel display (FPD) manufacturers will essentially halt new active-matrix organic light-emitting diode (AMOLED) panel factory construction for mobile applications in 2018. At the same time, their Chinese rivals are continuing to build new factories as fast as they can, according to IHS Markit (Nasdaq: INFO).

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Since the third quarter of 2017, South Korean FPD makers have been reevaluating the pace of their AMOLED expansion strategies. By the end of January 2018, with demand falling short of expectations and suffering from low factory utilization rates, they delayed all major capacity expansion plans, including several cases of deferring the ramp of equipment already installed.

As the market matures, concern is cumulating that smartphone sales may not continue to increase at rates as high as previously hoped for. With display and smartphone performance specifications already excellent, the replacement cycle is lengthening. Furthermore, adoption of high-end flexible AMOLED panels in a wider range of models is being restricted by high prices that are still about two times those of equivalently specified liquid crystal displays (LCDs).

“After doubling AMOLED capacity for mobile applications in the past two years, a slowdown in facility investment in South Korea is not surprising,” said Charles Annis, senior director at IHS Markit. “Even so, the freezing of all new investments and multiple mass production schedules suggests recognition that continued capacity additions will outpace the market’s ability to absorb them.”

Despite market concerns and changing investment plans in South Korea, Chinese FPD makers are still pushing ahead with their own aggressive new AMOLED factory plans, at least for now. According to the AMOLED and LCD Supply Demand & Equipment Tracker by IHS Markit, ramped Chinese AMOLED capacity will rise from just 228,000 square meters per year in 2016 to 8.3 million square meters in 2020, at a compound annual growth rate of 145 percent.

Chinese makers are not immune to challenges in the smartphone and flexible AMOLED market, and in most cases, they have not yet proven their ability to manufacture premium flexible AMOLED panels at high volume. Regardless, with strong financial backing from local governments, most projects are still moving forward as planned, and will likely continue until credit begins to tighten.

South Korean panel makers are carefully watching how fast the market for AMOLED displays is increasing and are prudently adjusting capacity plans. Chinese makers have less flexibility and less motivation to change strategies due to contracts with local governments in multiple locations across the country.

“The rationalization of how fast the mobile AMOLED display market can grow does raise questions,” Annis said. “What will drive a renewal of investment in South Korea and how will Chinese FPD makers fill their new fabs?”

“Reduced panel prices will enable AMOLEDs to compete more on performance and form factor advantages over LCDs, while new applications, particularly foldable displays, will increase average panel size. Both of these trends have the potential to significantly drive future demand; however, in the shorter term, they remain elusive targets due to high costs and remaining technical barriers,” Annis said.

Thanks to a sudden increase in demand , shipment revenue of flexible active-matrix organic light-emitting diode (AMOLED) displays more than tripled in 2017, accounting for 54.6 percent of total AMOLED panel shipment revenue, according to business information provider IHS Markit (Nasdaq: INFO).

The flexible AMOLED panel market expanded by about 250 percent in 2017 to $12 billion from $3.5 billion in 2016, while rigid AMOLED panel shipment revenue contracted by 14 percent during the same period. Samsung Display started supplying its flexible AMOLED displays for the iPhone X in the third quarter of 2017, which greatly contributed to the overall shipment revenue increase. LG Display, BOE and Kunshan Govisionox Optoelectronics also started producing flexible AMOLED panels for smartphones and smartwatches in 2017, helping the market growth.

“High-end smartphone brands have increasingly applied flexible AMOLED panels to their products for unique and special design,” said Jerry Kang, senior principal analyst at IHS Markit. “The number of flexible AMOLED panel suppliers is also increasing, but the supplying capacity is still concentrated in Samsung Display.”

The flat type flexible AMOLED panels accounted for about a half of total flexible AMOLED shipment units in 2017, shifting from the curved type that used to be the major flexible AMOLED display form factor until 2016.

“As Apple applied the flat type to the iPhone X, the form factor of smartphone displays has diversified,” Kang said.

According to the latest AMOLED & Flexible Display Intelligence Service by IHS Markit, the demand for flexible AMOLED panels is not expected to grow as fast as supply capacity in 2018. “In a way to overcome potential oversupply, many panel makers are trying to develop another innovative form factor, such as foldable or rollable, within a few years,” Kang said.

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Despite slower demand from end market and panel price erosion, the large thin-film transistor (TFT) display market expanded in 2017 in all three aspects — unit shipments, area shipments and revenue. According to a new report from business information provider IHS Markit (Nasdaq: INFO), unit shipments of larger than 9-inch TFT displays increased by 4 percent in 2017 compared to a year ago, while area shipments rose 6 percent and revenues up 13 percent during the same period.

“Revenue growth was higher than that of area shipments, which was again bigger than that of unit shipments. This indicates that the display market is moving to larger screens in all applications, and the penetration of high specification products with a higher price tag, such as high resolution, wide viewing angle and slim design panels, has increased,” said Robin Wu, principal analyst at IHS Markit. Large TFT display revenues reached $63.7 billion in 2017, according to the latest Large Area Display Market Tracker by IHS Markit.

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By area shipments, TV displays, which grew 6 percent year over year, accounted for 78 percent of total large TFT display market, leading the overall market growth. Despite ongoing decline in TV panel prices, which started in the middle of 2017, revenue continued to grow by a double digit as panel makers have focused on high-end products, such as 4K TVs and 55-inch-and-larger TVs. Shipments of 4K TV panels amounted to 92 million units in 2017, up 46 percent year over year, making up 35 percent of the entire TV display market. OLED TV panels also continued its growth, marking unit shipments of 1.8 million with a 102 percent growth from 2016.

BOE led the large TFT display market with a 21 percent share in 2017 in terms of unit shipments, followed by LG Display with 20 percent and Innolux with 16 percent. It was the first time that a Chinese panel maker took the top position in an annual base result. However, in the TV panel market by unit shipments, LG Display retained its lead with a 19 percent share, followed by BOE with 17 percent. In terms of area shipments, South Korean panel makers remained strong, with LG Display accounting for 23 percent and Samsung Display for 17 percent.

The Large Area Display Market Tracker by IHS Markit provides information about the entire range of large display panels shipped worldwide and regionally, including monthly and quarterly revenues and shipments by display area, application, size and aspect ratio for each supplier.

Total shipments of mobile phone displays, including thin-film transistor liquid crystal display (TFT LCD) and active matrix organic light-emitting diode (AMOLED) panels, reached 2.01 billion units in 2017, up 3 percent from 2016, according to preliminary estimate from business information provider IHS Markit (Nasdaq: INFO).

In the growing mobile phone display market, shipments of low-temperature-poly-silicon (LTPS) TFT LCD panels, which realize high-resolution images, increased by 21 percent to 620 million units in 2017 compared to the previous year. Shipments of amorphous silicon (a-Si) TFT LCD mobile phone panels declined 4 percent to 979 million units during the same period. Even though shipments of AMOLED panels jumped in the second half of 2017 thanks to the launch of the iPhone X, combined with the weak demand in the first half, its shipments were up just 3 percent to 402 million units in 2017.

In the smartphone-use LTPS TFT LCD market, Tianma, a leading small and medium panel supplier in China, has shown significant growth, expanding its shipments to Chinese smartphone set brands, such as Huawei and Xiaomi. In 2017, Tianma shipped 105 million LTPS TFT LCD panels for smartphones, almost double its shipments in 2016, with a market share of 17 percent, up 6 percentage points from 2016. It ranked the second largest LTPS TFT LCD supplier for smartphones in 2017, taking over LG Display with 16 percent, down 4 percentage points, and Sharp with 13 percent, down 1 percentage point. In 2017, Japan Display continued its market leader position but shed its share by 10 percentage points to 26 percent in 2017, according to the latest Smartphone Display Intelligent Service report by IHS Markit.

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“LTPS TFT is a key technology to produce high-resolution displays for smartphones, and experience is required to optimize highly complex LTPS manufacturing process in each production fab. In terms of experience, Japanese and South Korean panel makers have a competitive advantage compared to Chinese makers,” said Hiroshi Hayase, senior director at IHS Markit. “However, Chinese LCD makers, such as Tianma and BOE, are catching up LTPS technology fast enough to support high demand from Chinese smartphone set makers.”

The Smartphone Display Intelligent Service by IHS Markit contains quarterly updates of smartphone display shipments and revenue by application, size, resolution and technology. It also provides supply chain information between display and set makers, as well as monthly smartphone display shipment and pricing information.

By Jamie Girard and Jay Chittooran, SEMI Public Policy

With much pride, President Donald Trump, in his State of the Union address last week, touted the signature legislative achievement of his first year in office – passage of the Tax Cuts and Jobs Act.  As companies doing business globally, SEMI members have long stressed their concern that the US business tax code was putting them at a disadvantage.  SEMI has worked for many years to voice its position that the US code needed to be reformed to lower the overall tax rate on businesses while also retaining incentives for innovation, like the research and development (R&D) and tax credits.  SEMI also pushed for the US to move to a territorial tax system to bring the US into alignment with the rest of the world.

President Donald Trump, State of the Union speech. Photo credit: CNN

President Donald Trump, State of the Union speech. Photo credit: CNN

The Tax Cuts and Jobs Act implements all the of principle that SEMI members have advocated for, and included other industry priorities like repatriation of foreign held assets at a lower rate.  The new structure promises to allow for a more competitive business environment for companies doing business from the US, and greater growth for them globally.

“As tax cuts create new jobs, let us invest in workforce development and job training,” Trump noted in his State of the Union speech, addressing another major industry priority. “Let us open great vocational schools so our future workers can learn a craft and realize their full potential.”

Workforce development (Talent) is a critical issue for the industry, and SEMI recognizes the pressing need on multiple fronts to find the workers, both technical and highly-educated, to continue the work of driving innovation in the semiconductor industry.  While SEMI works with industry partners to boost the industry talent pool, we also recognize that the federal government has a role to play in ensuring that the US is doing its share to help address the problem. That’s why SEMI supports legislation like H.R. 4023, the Developing Tomorrow’s Engineering and Technical Workforce Act, aimed at providing federal dollars to promote engineering education at all levels of learning. The bill has bipartisan support in Congress, and SEMI will continue to work to see the bill travel to President Trump’s desk for his signature.

Facilitating trade and lowering barriers for good and services to move across borders is key to SEMI’s mission to support its members. The semiconductor industry has catalyzed growth across the global economy – growth that relies heavily on trade.

“America has also finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our nation’s wealth,” Trump noted last Tuesday. “The era of economic surrender is over. From now on, we expect trading relationships to be fair and to be reciprocal. We will work to fix bad trade deals and negotiate new ones.”

Unfortunately, trade has been turned into a hot-button political issue, raising many new trade challenges to companies throughout the semiconductor industry. The Trump Administration has levied intense criticism of China, launched a number of trade investigations citing foreign overproduction, and has threatened to withdraw from the Korea-U.S. Free Trade Agreement (KORUS). The United States has also levied tariffs on a number of products, including solar cells. This is all on top of the North American Free Trade Agreement (NAFTA) modernization talks, which have seen slow and shallow progress.

While the United States “reexamines” and stands still, other countries are filling the leadership void. China, Canada, Korea, and the European Union, among others, are negotiating or have concluded trade deals in the last year. Indeed, the updated Trans-Pacific Partnership, which now excludes the US but covers many of the fastest-growing Asian markets, is on track to be enacted by the end of the year. SEMI will continue to work on behalf of its members around the globe to open up new markets and lessen the burden of regulations on cross-border trade and commerce.

Additionally, although President Trump devoted much his address to immigration, he overlooked the opportunity to address the need for immigration reform for high-skilled workers.  This important aspect of the immigration debate, which also has major implications for economic growth, will fall to Congress to sort out in any immigration package it considers in the coming weeks.

Fortunately, Sen. Orrin Hatch (R-UT) recently reintroduced his Immigration Innovation Act, also known as “I-Squared,” which would implement a number of reforms to the H1-B visa and green card system for highly-skilled workers.  The bill would raise the cap for H1-B visas from the current 65,000 to allow for as many as 190,000 in good economic times, while also lifting the cap on greed card holders with STEM degrees from US institutions.  SEMI has long supported these efforts and will continue to work with policymakers to see reforms implemented to improve the system.

While partisanship in Washington remains high, SEMI continues to work on behalf of its members to advance crucial public policy matters for its members with policymakers in Washington, DC. In particular, SEMI focuses on how these issues impact the four 4T’s – Trade, Taxes, Technology and Talent. The path forward on many of these issues will be complicated by midterm election year politics, but the opportunity remains to see real positive changes enacted, even in such a challenging environment.

If you’d like more information on SEMI’s public policy work, or how you can be involved, please contact Jamie Girard at [email protected].

This year again, the Las Vegas Consumer Electronics Show, 2018 edition allowed us to discover the latest innovations in numerous fields including the microLED displays sector. “The Wall”, a 146” microLED TV powered by Samsung, has been probably the most impressive announcement. The Korea-based LED maker Lumens also proposed a 139” display, with smaller 0.8 mm pitch. In both cases, technology developed by these leaders is not strictly microLED related but confirms the attractiveness of microLEDs solutions. Yole Développement’s (Yole) analyst, Dr. Eric Virey attended the show and proposed a snapshot on i-micronews.com.

“Initial success in smartwatches could accelerate technology and supply chain maturation, making microLED competitive against OLED in high end TVs, tablets and laptops”, explains Dr. Eric Virey from Yole. “In Yole’s most optimistic scenario, the market for microLED displays could reach up to 330 million units by 2025 (1) .”

The microLED display sector has been deeply analyzed by Yole and KnowMade, both parts of Yole Group of Companies. The partners propose today a detailed patent analysis titled: Microled Displays: Intellectual Property Landscape. Under this new report, they identified key patents, technology nodes and players related to microLED technologies for display applications. This latest analysis confirms the growing interest around the microLED technologies.
Which companies own the patents? What are their major thrust areas and portfolio strength? Yole Group of Companies invites you to discover the latest insights of this dynamic industry.

Yole Group of Companies confirms the buzz: as of today close to 1,500 patents relevant to the microLED display field have been filed by 125 companies and organizations. Among these are multiple startups, display makers, OEMs , semiconductor companies, LED makers, and research institutions.

“The overall corpus is relatively young, with an average age of 3.2 years across all families”, asserts Dr. Nicolas Baron, CEO & Founder, KnowMade. The first patents were filed in 2000 – 2001, but the bulk of the activity started after 2012. Thus, only a minority of patents have been granted so far.

Pioneers include Sony, Sharp, MIT, and others, although the bulk of the initial developments were conducted by a variety of research institutions including Kansas State University, University of Hong Kong, Strathclyde University & Tyndall Institute (which spun-off mLED, InfiniLED, and X-Celeprint), University of Illinois, and startup companies like Luxvue and, later on, Playnitride and Mikro Mesa.

Yole Group of Companies’ study also reveals a number of companies that have not yet been identified as players in the microLED display field. Moreover, this study confirms the commitment of many more companies, which are not typically associated with display technology. Intel and Goertek are part of them. On the flip side, various companies known to be active in the field (i.e. Huawei) have yet to see any of their patent in the field published.

Overall, the activity is still led mostly by startups (including those such as Luxvue or eLux) acquired by larger organization) and research institutions. With the exception of Sharp and Sony, display makers and LED makers are relative latecomers. Many companies started ramping up their microLED research and development activities after Apple showed faith in microLED with its acquisition of Luxvue. As of December 2017, Apple appears to have the most complete IP portfolio, covering almost all key technology nodes. However, many of its patents pertain to the technological ecosystem developed around the company’s MEMS transfer technology. Other companies like Sony, with a smaller portfolio but which had a head start, might own more fundamental design patents with strong blocking power.

What is the status of the microLED display supply chain? Enabling large-scale microLED display manufacturing requires bringing together three major disparate technologies and supply chain bricks: LED manufacturing, backplane manufacturing, and microchip mass transfer & assembly.

“The supply chain is complex and lengthy compared to typical displays,” comments Dr. Eric Virey from Yole. “Every process is critical and it’s a challenge to effectively manage every aspect. No one company appears positioned to master and execute across a supply chain that will likely be more horizontal, compared to other established display technologies.”

The IP landscape reflects these challenges through the variety of players involved, but requirements differ from one application to another. For low-volume, high added-value applications like microdisplays for augmented/mixed reality for the enterprise, military, and medical markets, one can envision a well-funded startup with good technology efficiently managing the supply chain. However, consumer applications such as TVs and smartphones will require significant investments to unlock large scale manufacturing.

Though only a few companies have a broad IP portfolio covering all major technology nodes (transfer chip structure, display architecture, etc.), enough players have patents across many technology bricks to guarantee that complex licensing and legal battles will arise once microLED displays enter volume manufacturing and reach the market. Small companies with strong positions in various technology bricks will attempt to obtain licensing fees from larger players involved in manufacturing. Large corporations will try to block each other and prevent their competitors from entering the market. To prepare for such events, some latecomers appear to be filing large quantities of patents, sometimes with little substance.

By Jay Chittooran, Manager, Public Policy, SEMI

International trade is one of the best tools to spur growth and create high-skill and high-paying jobs. Over 40 million American jobs rely on trade, and this is particularly true in the semiconductor supply chain. Over the past three decades, the semiconductor industry has averaged nearly double-digit growth rates in revenue and, by 2030, the semiconductor supply chain is forecast to reach $1 trillion. Trade paves the way for this growth.

Unfortunately, despite its importance to the industry, trade has been transformed from an economic issue into a political one, raising many new trade challenges to companies throughout the semiconductor industry.

GHz-ChinaChina’s investments in the industry will continue to anchor the country as a major force in the semiconductor supply chain. China’s outsized spending has spawned concern among other countries about the implications of these investments. According to SEMI’s World Fab Forecast, 20 fabs are being built in China – and construction on 14 more is rumored to begin in the near term – compared to the 10 fabs under construction in the rest of the world. China is clearly outpacing the pack.

The Trump Administration has levied intense criticism of China, citing unfair trade practices, especially related to intellectual property issues. The U.S. Trade Representative has launched a Section 301 investigation into whether China’s practice of forced technology transfer has discriminated against U.S. consumers. Even as the probe unfolds, expectations are growing that the United States will take action against China, raising fears of not only possible retaliation in time but rising animosity between two trading partners that rely deeply on each other.

A number of other open investigations also cloud the future. The Administration launched two separate Section 232 investigations into steel and aluminum industry practices by China, claiming Chinese overproduction of both items are a threat to national security. The findings from these investigations will be submitted to the President, who, in the coming weeks, will decide an appropriate response, which could include imposing tariffs and quotas.

Another high priority area is Korea. While U.S. threats to withdraw from the U.S.-Korea Free Trade Agreement (KORUS) reached a fever pitch in August, rhetoric has since tempered. Informal discussions between the countries on how best to amend the trade deal are ongoing. The number of KORUS implementation issues aside, continued engagement with Korea – instead of scrapping a comprehensive, bilateral trade deal – will be critically important for the industry.

Lastly, negotiations to modernize the North American Free Trade Agreement (NAFTA) will continue this year. The United States wants to conclude talks by the end of March, but with the deadline fast approaching and the promise of resolution waning, tensions are running high. Notably, the outcome of the NAFTA talks will inform and set the tone for other trade action.

What’s more, a number of other actions on trade will take place this year. As we wrote recently, Congress has moved to reform the Committee on Foreign Investment in the United States (CFIUS), a government body designed to review sales and transfer of ownership of U.S. companies to foreign entities. Efforts have also started to revise the export control regime – a key component to improving global market access and making international trade more equitable.

SEMI will continue its work on behalf of its members around the globe to open up new markets and lessen the burden of regulations on cross-border trade and commerce. In addition, SEMI will continue to educate policymakers on the critical importance of unobstructed trade in continuing to push the rapid advance of semiconductors and the emerging technologies they enable into the future. If you are interested in more information on trade, or how to be involved in SEMI’s public policy program, please contact Jay Chittooran, Manager, Public Policy, at [email protected].

Demand for liquid crystal display (LCD) panels from South Korean and Chinese TV makers was strong in the fourth quarter of 2017, but implementation of their panel purchasing strategies for the first quarter of 2018 may result in a correction as demand expectations change. While some TV brands are expected to maintain their panel purchasing plans, others are forecast to reduce demand in the first quarter as it is a traditionally slow season and some demand was pulled into the last quarter, according to IHS Markit (Nasdaq: INFO).

According to the latest TV Display & OEM Intelligence Service report by IHS Markit, South Korean TV makers are expected to reduce LCD panel purchasing volumes by 3 percent in the first quarter of 2018 compared to the previous quarter, or to increase by 1 percent compared to the same period last year.

“There is risk of a correction in demand as their panel purchasing plans get underway given that a sufficient supply chain buffer is already factored in for the first quarter. These manufacturers will likely continue to use their plans as a negotiating tactic for more competitive prices,” said Deborah Yang, director of display supply chain at IHS Markit. “This has been one of the most critical swing factors for the LCD panel supply and demand.”

China’s top six TV makers — ChangHong, Haier, Hisense, Konka, Skyworth and TCL — are forecast to cut their LCD panel purchasing volumes by 30 percent in the first quarter of 2018 over quarter, and 5 percent over year.

“It is estimated that the Chinese brands carried relatively higher level of inventories as of the end of December 2017 as they have been preparing for the upcoming promotional seasons in early January and the Chinese New Year holidays in February. Given this, they are in no rush to secure more panel supplies in the first quarter, and may want to negotiate for lower prices,” Yang said.

011718_Chinas_top_tier_brands_TV_panel_purchases

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“Due to a coming slow season, the bargaining power seems to be with TV makers. However, uncertainties about a stable supply of feature-rich premium and larger panels will have the top-tier TV brands concerned,” Yang said. Chinese panel makers, she said, have yet to prove that they will actually start mass-producing 65-inch LCD panels from the world’s first Gen 10.5 fabs in the first quarter.

“The top-tier TV brands will want to make sure they can secure sufficient panel supplies of 65-inch and larger panels,” Yang said. “At the same time, they also seek to attain better bargains on large and ultra-large panels in 2018 and beyond.”

Panel makers, however, have not agreed to offer more price concessions. Some panel makers are scheduled to remodel fabs in the first quarter and this will eventually cause an unstable supply of LCD TV panels, particularly for larger sizes. “All this points to the likelihood that the TV panel market will see chaotic swings in demand in the first quarter of 2018,” Yang said.

As the demand for super-large TV displays grow, the need for higher resolution is set to increase, seeing the first uses of 8K display in 2018, according to IHS Markit (Nasdaq: INFO).

While ultra-high definition (UHD) panels are estimated to account for more than 98 percent of the 60-inch and larger display market in 2017, most TV panel suppliers are planning to mass produce 8K displays in 2018. The 7680 x 4320 pixel resolution display is expected to make up about 1 percent of the 60-inch and larger display market this year and 9 percent in 2020, according to the Display Long-term Demand Forecast Tracker report by IHS Markit.

60-inch_and_larger_TV_panel_shipment_forecast_by_resolution

“As UHD has rapidly replaced full HD in the super large-sized TV display market, panel makers are willing to supply differentiated products with higher resolution and improve profit margin with premium products,” said Ricky Park, director at IHS Markit. “Year 2018 will become the first year of the 8K resolution TV display.”

Innolux started developing 8K panels in 2017 and produced its first ever 8K LCD TV display (60Hz, 65-inch) in the fourth quarter of 2017. The display will be supplied to Sharp TV and Chinese brands in the beginning. Meanwhile, Sharp has also mass produced its first 8K LCD TV display at 70-inch in the last quarter of 2017 to support the Sharp TV brand in China.

Looking at the 8K display roadmap in 2018, it appears that Samsung Electronics and Sony are driving the market at this time. They plan to release their flagship 8K TV models in 2018. Samsung and Sony will consume almost all 120Hz 8K panels from Innolux, AUO and Samsung Display, with sizes varying from 65 to 75 and 85 inches.

BOE and CEC-Panda are now planning to develop 8K LCD TV panels in the second half of 2018 and taking on a differentiation strategy, LG Display will likely focus on developing OLED 8K panel in the future. LG Display unveiled the world’s first 88-inch 8K OLED TV display at CES 2018.

Based on current plans, panel makers in the early stages of development will mostly develop 60Hz 8K displays based on a-Si technology, and those in the next stages are also likely to develop 120Hz 8K displays based on oxide technology. The latter has advantages, such as better aperture ratio and lower power consumption.

Worldwide PC shipments totaled 71.6 million units in the fourth quarter of 2017, a 2 percent decline from the fourth quarter of 2016, according to preliminary results by Gartner, Inc. For the year, 2017 PC shipments surpassed 262.5 million units, a 2.8 percent decline from 2016. It was the 13th consecutive quarter of declining global PC shipments, as well as the sixth year of annual declines. However, Gartner analysts said there were some signs for optimism.

“In the fourth quarter of 2017, there was PC shipment growth in Asia/Pacific, Japan and Latin America. There was only a moderate shipment decline in EMEA,” said Mikako Kitagawa, principal analyst at Gartner. “However, the U.S. market saw a steep decline, which offset the generally positive results in other regions.

“The fourth quarter results confirmed again that PCs are no longer popular holiday gift items. This does not mean that PCs will disappear from households,” Kitagawa said. “Rather, the PC will become a more specialized, purpose-driven device. PC buyers will look for quality and functionality rather than looking for the lowest price, which will increase PC average selling prices (ASPs) and improve profitability in the long run. However, until this point is reached, the market will have to go through the shrinking phase caused by fewer PC users.”

HP Inc. moved into the No. 1 position in the fourth quarter of 2017, as its shipments grew 6.6 percent, and its market share totaled 22.5 percent (see Table 1). The company showed year-over-year growth in all regions, including the challenging U.S. market. For the fourth consecutive quarter, Lenovo experienced a decline in shipments. Lenovo had moderate growth in EMEA and Asia/Pacific, but shipments declined in North America.

Table 1
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 4Q17 (Thousands of Units)

Company

4Q17 Shipments

4Q17 Market Share (%)

4Q16 Shipments

4Q16 Market Share (%)

4Q17-4Q16 Growth (%)

HP Inc.

16,076

22.5

15,084

20.7

6.6

Lenovo

15,742

22.0

15,857

21.7

-0.7

Dell

10,841

15.2

10,767

14.7

0.7

Apple

5,449

7.6

5,374

7.4

1.4

Asus

4,731

6.6

5,336

7.3

-11.3

Acer Group

4,726

6.6

4,998

6.8

-5.4

Others

13,990

19.6

15,599

21.4

-10.3

Total

71,556

100.0

73,015

100.0

-2.0

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads. All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.
Source: Gartner (January 2018)

Dell’s shipments grew slightly in the fourth quarter of 2017. Dell did well in EMEA, Asia/Pacific and Latin America, but it had weak results in North America. Generally, Dell has put a higher priority on profitability over market share.

Steep PC shipment decline in the U.S.

In the U.S., PC shipments surpassed 15.2 million units in the fourth quarter of 2017, an 8 percent decline from the fourth quarter of 2016 (see Table 2). Four of the top five vendors experienced a decline in U.S. PC shipments in the fourth quarter of 2017. HP Inc. was the only vendor to increase shipments in the quarter. The decline was attributed to weak consumer demand despite holiday season sales.

“U.S. consumer confidence was high in the fourth quarter of 2017, but that did not influence PC demand. U.S. holiday sales were filled with popular products, such as voice-enabled speakers, and newly released smartphones,” Kitagawa said. “PCs simply could not compete against these gift items during the holiday season. We did see some consistent growth of gaming and high-end PCs.”

Table 2
Preliminary U.S. PC Vendor Unit Shipment Estimates for 4Q17 (Thousands of Units)

Company

4Q17 Shipments

4Q17 Market Share (%)

4Q16 Shipments

4Q16 Market Share (%)

4Q17-4Q16 Growth (%)

HP Inc.

5,130

33.7

5,049

30.5

1.6

Dell

3,691

24.3

4,209

25.4

-12.3

Apple

1,972

13.0

2,003

12.1

-1.6

Lenovo

1,792

11.8

2,344

14.2

-23.6

Acer Group

587

3.9

661

4.0

-11.2

Others

2,042

13.4

2,276

13.8

-10.3

Total

15,214

100.0

16,543

100.0

-8.0

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads. All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.
Source: Gartner (January 2018)

PC shipments in EMEA totaled 21.8 million units in the fourth quarter of 2017, a 1.4 percent decline year over year. PC demand in the U.K. was still ailing and unit shipments into Germany were weaker than expected. PC revenue is expected to be up year over year in Western Europe. The rise in ASPs is due to currency fluctuations, the need for vendors to offset rising component costs, and a product-mix shift toward higher-value items, such as gaming systems and high-performing notebooks.

The Asia/Pacific PC market totaled 25 million units in the fourth quarter of 2017, a 0.6 percent increase from the fourth quarter of 2016. The consumer market stabilized with fourth-quarter online promotions in many countries, which drove demand for gaming PCs and thin and light notebooks. China experienced its first positive PC shipment growth since the first quarter of 2012. The success of the 11.11 shopping festival and the continuing demand for PCs in the commercial market drove the China PC market to 1.1 percent growth in the quarter.

PC market consolidation in 2017

For the year, worldwide PC shipments totaled 262.5 million units in 2017, a 2.8 percent decrease from 2016 (see Table 3). As the PC industry continues to consolidate, the top four vendors in 2017 accounted for 64 percent of global PC shipments. In 2011, the top four vendors accounted for 45 percent of PC shipments.

“The top vendors have taken advantage of their volume operations to lower production costs, pushing small to midsize vendors out of the market,” Kitagawa said.

Table 3
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2017 (Thousands of Units)

Company

2017

Shipments

2017 Market

Share (%)

2016

Shipments

2016 Market Share (%)

2017-2016 Growth (%)

HP Inc.

55,162

21.0

52,734

19.5

4.6

Lenovo

54,714

20.8

55,951

20.7

-2.2

Dell

39,871

15.2

39,421

14.6

1.1

Apple

19,299

7.4

18,546

6.9

4.1

Asus

17,967

6.8

20,496

7.6

-12.3

Acer Group

17,088

6.5

18,274

6.8

-6.5

Others

58,435

22.3

64,683

23.9

-9.7

Total

262,537

100.0

270,106

100.0

-2.8

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads. All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.
Source: Gartner (January 2018)

These results are preliminary. Final statistics will be available soon to clients of Gartner’s PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe.