14 DAY TRIAL // The recent fire in the Lite-On LCD display production lines left the industry without an important raw material provider. The fire started on February 3 and caused about $7.72 million damage, but the most important aspect is that the other LCD manufacturers that would rely on Lite-On panels will have to look for other suppliers.
Lite-On is the world's fifth largest LCD panel manufacturer, and many other monitor and television manufacturers are paralyzed by the lack of supply. The most important customers that are affected by the shortage in LCD panel supply are Hewlett-Packard, Dell, Lenovo and BenQ, among others.
According to Analyst Chris Connery at DisplaySearch, 22 percent of HP's production of LCD monitors are built using Lite-On LCD panels. Dell is only using Lite-On raw materials in 20 percent of its products, while Lenovo uses only 19 percent of them. Despite the fact that the vendors usually rely on more than one supplier in order to combat shortages, Connery estimates that the disappearance of Lite-On from the list of LCD providers will have a significant impact on the monitor and television market.
"Dell has been losing share to stand-alone monitor brand Samsung for the past few quarters, and a disaster such as this could impact their worldwide share even more in the coming months," he writes on the company blog. However, Connery claims that f the Taiwan firm outsources its own production to local competitors or even if the display manufacturers go straight to them, then the industry damage could be controlled.
"This could have a major impact on the landscape of the desktop monitor industry in the first and second quarters of 2008, but most probably in regards to share shift rather than in overall supply and demand," said Connery in a report.
Lite-On officials stated that the fire loses will reflect in the second-quarter financial results. However, the LCD business brings Lite-On about 40 percent of its overall revenue, but the insurance policy covers all the damages, including the operational loss from disruption of production.