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April 28, 2017

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4K TV boon to Taiwan IC suppliers: Morgan Stanley

TAIPEI--Growing demand for 4K televisions — ultra-HD TVs with a resolution of 3840 x 2160 pixels — will likely benefit Taiwanese suppliers of the chips that control LCD flat-panel displays, according to U.S. brokerage Morgan Stanley.

The U.S. brokerage firm said in a research note last week that the market still views 4K TVs as a niche product due to high prices and a lack of content broadcast in ultra-HD.

Despite that, it forecast 4K TV penetration will reach 25 percent in 2015 and 40 percent in 2016 as 4K TV prices would fall to about US$668 on average in 2016 from the current US$999. Morgan Stanley attributed the expected drop to improving yields and competition between TV brands.

The development of 4K content and video streaming will also be driven by more 4K broadcasting from operators in the United States, China, South Korea and Japan, the brokerage said in a June 12 note to clients.

"We believe LCD driver integrated circuit (IC) vendors in Taiwan are best positioned to leverage the 4K2K TV demand upside," Morgan Stanley said. Its top stock preference was Chipbond Technology Corp. (頎邦科技), followed by Novatek Microelectronics Corp. (聯詠科技) and ChipMOS Technologies Inc. (南茂科技)

Analysts expect potential beneficiaries in panel, wafer foundry, TV chipset, and DRAM sectors, handing out an "overweight" rating to flat-panel maker AU Optronics Corp. (AUO, 友達光電) and "equal-weight" to memory chip maker Winbond Electronics Corp. (華邦電子)

Both AUO and Innolux Corp. (群創光電), also from Taiwan, are forecast to lead global shipments of 4K panels in 2014, accounting for a combined 58 percent share of the global market, according to market intelligence firm NPD DisplaySearch.

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