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TFT LCD Fab Activity, Supply and Demand, TFT LCD Equipment, and Capital Expenditures Forecasts

KYOTO, JAPAN, October 11, 2005 - -DisplaySearch, the worldwide leader in display market research and consulting and part of The NPD Group, reports in its Quarterly TFT LCD Supply/Demand and Capital Spending Report that component supply could not keep up with strong demand in Q3'05, extending a component -restricted shortage in large -area panels. In terms of unrestricted, raw array capacity, supply was sufficient in Q3'05, and by all DisplaySearch metrics, the surplus is expected to continue to widen in Q4'05 and into 2006.

According to DisplaySearch Vice President Charles Annis, "Demand in the first three quarters of the year proved stronger than expected, which has somewhat bolstered market expectations and improved the outlook for future investments. Fab investments continue to be planned and made in order to position for an upturn expected by panel manufacturers, for first mover advantage, for political motivations, and to increase market share and scale. The TFT LCD equipment spending forecast for 2006 has been revised up to $9.37 billion, almost to the same level as 2005. This significant spending, continuing from 2004, is projected to generate a long term array capacity surplus, warranting a relatively conservative investment outlook for 2007 and beyond."

Other highlights from the most recent report include:

The most recent report shows 58 individual AMLCD fab investments with install dates between Q2'05 to Q2'08. Of these, 42 are for new or existing a -Si TFT LCD fabs, primarily targeting large -area markets. Sixteen of these are investments in LTPS fabs, mainly for small/mobile TFT LCD or AMOLED applications. Compared to the last issue of the report, there was an overall continued upward revision, particularly in 2007.

Total AMLCD capacity is expected to rise at a compound annual growth rate of 39% from 4.5 million in 2000 to 81.5 million square meters in 2009. Over the same period, color filter capacity is growing 38% compounded annually, rising from 5.2 million to 93.5 million square meters. Color filter capacity ranges 3 -8% higher than array capacity, suggesting tight supply if array capacity is highly utilized.

PDP capacity is also projected to grow at very high rates, rising from 1.5 million square meters in 2002 to 14.2 million square meters in 2009, a compound annual growth rate of 38%.

Despite smaller glass fabs converting to small/medium production, new large glass fabs will maintain total industry large -area allocation at 88% through Q2'08.
The increased capacity correlates directly to an increase in TFT LCD manufacturing equipment investment, where total cumulative spending from 2005 -2008 is now expected to reach $31.4 billion.

After reaching an all -time high in 2004, equipment spending is somewhat less in 2005; even so, at $9.6 billion this is the second strongest year in LCD history. The equipment spending forecast for 2006 has been revised to be flat with 2005. 2007 - 2008 are expected to be lower, nearer to spending levels reached in 2003. There are both upside and downside risks to this forecast. Most of downside danger in the short run is related to delays and merger discussions in Taiwan, which puts at risk $777 million in 2006 equipment spending and another $289 million in 2007. On the flipside, if panel makers proceed with their most aggressive plans, 2006 spending potentially could exceed 2005; even so, many of these investments are low probability, and it is unlikely that all of them would progress in the assumed time frame.

In 2006, the current forecast indicates the top three TFT LCD spenders (equipment only) will be Samsung at $1.3 billion, AUO at $1.1 billion and CMO at $994 million, with respective shares of 17.9%, 14.8% and 13.3%.
Over the last few years, Taiwanese panel manufacturers have successfully raised capital through a variety of financial instruments; since 2003, the top five makers have raised over $18.5 billion. There was a $2.3 billion increase in Q3'05 alone.

The Quarterly TFT LCD Supply/Demand and Capital Spending Report is one of DisplaySearch's most comprehensive publications, which provides detailed insights on actual and forecast AMLCD fab activity, panel supply/demand, and the capital equipment market. Furthermore, the report offers a broader prospective on the FPD industry through discussion of PDP, OLED and color filter fab activity, total announced capital spending, DisplaySearch's forecasting methodology and a variety of other relevant topics. The Q3'05 edition adds significant value to the report by extending the forecast range an entire year, so now quarterly projections cover Q2'05 -Q2'08, and annual forecasts range from 1999/2000 to 2008/2009. In addition, the QSD is now available as a user friendly PowerPoint file that enables users to copy and paste slides directly into their own company internal presentations and find specific topics easi! ly. The report contents include:

An Executive Summary
Fab Activity (LCD Array, Color Filter, PDP, OLED)
TFT LCD Supply Analysis
TFT LCD Supply/Demand Analysis
TFT LCD Equipment
TFT Capital Expenditures & Financing

The in -depth Quarterly TFT LCD Supply/Demand and Capital Spending Report is available for only $4,995 for an annual subscription of four releases. For more information on this report, please contact Arie Braun at 512 -459 -3126 x108 or at arie@displaysearch.com. Learn more about DisplaySearch's many other services at www.displaysearch.com.

About DisplaySearch

DisplaySearch has a core team of 31 employees located in North America and Asia who produce a valued suite of market forecasts, technology assessments, surveys, studies and analyses, and they organize influential industry events worldwide. Headquartered in Austin, Texas, DisplaySearch has regional operations in Chicago, Hong Kong, Houston, Kyoto, San Diego, San Jose, Seoul, Shenzhen, Taipei and Tokyo, and the company is on the web at www.displaysearch.com.

About the NPD Group Inc.

Since 1967 The NPD Group has provided reliable and comprehensive consumer and retail information for a wide range of industries. Today more than 1,400 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competition in order to help guide their business. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys, video games, and wireless. For more information visit www.npd.com.

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