TV IC Market Competition as Fierce as Ever

Mediatek Maintains Leadership Position in Q4’08

AUSTIN, Texas — While the flat panel TV market is beginning to consolidate, that process has not yet begun in TV chip manufacturing, according to analysis in DisplaySearch’s Q1’09 Quarterly TV Electronics Report. Competition is as fierce as ever, and no clear market leader has yet emerged.

While some consolidation occurred in 2008 with Broadcom’s acquisition of AMD’s TV business and STMicroelectronics’ purchase of Genesis, this has only kept pace with market expansion. As flat panel TV moves from being a product of the developed world to being the new normal in China, Eastern Europe and other middle income areas, it has created new market niches. Micronas’ announcement that it is exiting consumer semiconductors signals a new phase. Because the downturn is causing semiconductor vendors to reappraise activities, the huge investments in TV ICs and their risky returns will cause more companies to make hard decisions.

The TV IC market declined seasonally to 30 million units shipped into flat panel TVs in Q4’08. This was down 15.3% Q/Q, but up 3.5% Y/Y. Developed markets have completed their transition to flat panel TV, and growth in this segment is now being driven by China as LCD TV enters a rapid growth phase, replacing CRT TV.

“Concerns over the economic outlook have caused set makers to exhibit caution, and speculative inventory builds are expected to be lower than in previous years, dampening IC sales somewhat,” noted Paul Gray, DisplaySearch Director of Europe TV Market Research.

Table 1: Top Five TV IC Vendors

Vendor               Q4'08 Rank   Q3'08 Rank
------               ----------   ----------
Mediatek                      1            1
MStar                         2            2
Samsung                       3            3
Zoran                         4            5
NXP Semiconductors            5            7
 
Source: Q1'09 Quarterly TV Electronics Report

In Q4’08, Mediatek lost share again, down 3%. MStar increased share from 13% to 15% in Q4’08, propelled by strong positions in low-end sets from Samsung and LGE. MStar is also strong in China. Samsung gained share as their in-house customer continues to grow in the TV market. Trident continues to wait for new products to reach mass production, causing the company to slip to a joint eighth place in the rankings from fourth place. Q4’08 also saw a sharp increase in shipments from smaller IC vendors, driven by a surge in production by Chinese set makers serving their domestic market typically with lower-featured (such as non-MPEG) devices.